A great crowd of local franchisors, franchisees, prospects, and other members of the central Virginia franchise community gathered at the Westwood Club for the Virginia Franchise Forum’s quarterly meeting.  Tonight’s featured speaker was Kate Bartosik with FRANdata, who gave an excellent presentation on the current state of the franchise industry and what to look for in 2014 (and beyond).

A few highlights of her talk include:

  • Franchise systems showed modest, if unspectacular growth, in 2013, with food brands (e.g., quick service restaurants) showing the highest growth rates.
  • Among non-food concepts, clothing franchises and child-related franchises boasting the most growth.
  • In recent years, franchisors have tended to overestimate their projected development–by an average 20% or more per year since 2010 (hint to franchisors:  either revisit your development goals or change your development and sales strategies).
  • A new SBA small business lending program could be a promising option for prospective franchisees investing in lower cost franchise opportunities (under $350,000).
  • The percentage of franchise systems, particularly mature/established systems that offer FDD ITem 19 financial performance representations (formerly known as earnings claims) has grown in recent years.
  • Be wary of franchise-failure rates reported by SBA, for a variety of reasons, the actual failure rates are not nearly as bad.
  • FRANdata continues to see a steady influx of new concepts being franchised.
  • Franchisors should not focus too heavily on unit economics as much as:  (i) thinking beyond the FDD, (ii) meeting the increasingly sophisticated information demands of prospects, and (iii) crafting a compelling development presentation related to performance and support offered by the system.

The Virginia Franchise Forum will return in 2014 for its seventh year providing networking and educational events for the local franchise community, so enjoy the holiday season and stay tuned for updates.