In case you have an entrepreneurial spirit, and you have the capacity to invest, or if you don’t have any of these but want to know about the 11 fastest growing franchises of 2015, then the following few pages should give you enough information about this.
Business ideas originally arise from the intent to fulfill consumer needs which can be basic needs like food, water and shelter or latent needs like having more comfortable lives, easy food, effortless workouts, and more. There are people who see these as business opportunities and set out to fulfill these demands, and thus businesses are formed. Businesses satisfy consumer demands and in the process make money. They are an important cog in the socioeconomic machine as it helps in creating jobs and wealth.
As businesses grow, the ones dealing with retail consumers have to scale up their operations and expand to more locations. As the markets that they serve become saturated, companies have to look beyond these markets to capture a wider consumer base. A business that expands creates a more visible brand and gets opportunities for better financing and a larger consumer base.
Expanding requires capital expenditure and other resources. For example, when McDonald’s expanded beyond its first restaurant in San Bernardino, that might have involved quite a lot of work, like scouting for and buying land, complying with local rules and regulations, construction, and establishing a local supply chain. For a company like McDonald’s, it makes sense to outsource the work of opening new restaurants and keep its corporate brand focused on products.
This is where the concept of franchise originates. It’s a win-win situation. Franchises create a partnership between two entities: the franchisor, which has a brand and a product, and the franchisee, who has resources like local market knowledge and startup cash. This partnership infuses required capital into the business, lets the franchisee use the brand name, and in turn increases the consumer base. It lets the businesses expand its operations rapidly at multiple locations. For some businesses, franchising is their only way into a foreign market, as many countries require local involvement for a business to be established.
The franchising industry today has grown substantially. A person in India craves a hot brew from Starbucks. The franchise industry’s growth in recent decades has only highlighted its relevance to current business environment. According to a report by Global industry Analysts Inc., the size of the global franchise industry will soon be $3.96 trillion. In the U.S.A. this industry outperformed the rest of the economy and added 200,000 new jobs in 2014 (IHS Global Insight Report). In 2014, we also published an article on the profitability of franchising, the Top 10 Most Profitable Franchises in 2014.
Though this industry is growing, information about the franchises is limited to number of stores, startup costs, and other such financials. However, not much data is available regarding profitability of the franchisor or the overall turnover. An important criterion which decides the growth of a franchise is the number of new stores that have been added in 2015. We have included only those franchises for which the data is available in the public domain. The information has been taken from individual websites of the franchises and from industry specific sources like Entrepreneur. Since we are considering the fastest growing franchises of 2015 we considered data from 2014 and 2015. Only those franchises were considered who at least have 100 stores as of 2015. We ranked the stores based on following criteria:
1. The percentage increase in number of stores — It is important to know the expansion made by these franchises over the previous year. It normalises the effect of larger base number of stores. We are giving it a weight of 30%.
2. The absolute number of stores added — The number of new stores added over the previous year would definitely give us an indication about the intent of the franchisor in expanding their franchise to more markets. Moreover, these numbers can help us identify the real big players in this sector when we are talking about global scenario. We are giving weight of 70% for this ranking criteria.
Based on these scores here is the list of 11 fastest growing franchises of 2015.