If you’re interested in buying a franchise in 2016, the most important news of late, 2015 was a good news/bad news development.
On Dec. 16, 2015, the Federal Reserve Board raised interest rates for the first time since 2006. The decision to hike the federal funds rate by 0.25 percent after it had been close to zero percent for nearly a decade was, on the surface, bad news for borrowers. It means that people who borrow money from a bank in 2016, including business executives and entrepreneurs who are interested in buying a franchise, will probably pay a higher interest rate as they repay their loans.
However, the Fed’s decision was really good news, according to most economic analysts. Why? Well, the members of the Federal Reserve Board have kept interest rates extremely low since 2006 because they feared that raising the costs of borrowing would hamper economic growth. The fact that they no longer feel that way means that they have studied the economic data and believe that the economy in 2016 will have its best year since The Great Recession. That is truly good news for all Americans, including people interested in franchise opportunities.
A report by International Franchise Association (IFA) has even better news. The IFA’s annual report forecasts that the franchisesector “will once again outperform the overall economy in 2016,” according to the article “The 6 Best Franchise Types For 2016.”While the USA’s gross domestic product is forecast to grow 3.1 percent, the franchising industry will grow 5.1 percent, the report says.
Since economic experts forecast a better economy in 2016, where should you invest your money during 2016? Which industries are the best choice to invest in? Which franchises are the best choice?
The IFA reports that the personal services industry will have the most growth in new franchise units opened in 2016. It will grow 1.9 percent while the lodging (1.8 percent), business services (1.7 percent), quick-service restaurants (1.6 percent), retail products and services (1.6 percent), and commercial and residential services (1.6 percent) industries will also be among the six “best franchise types” in 2016.
Entrepreneur magazine has also made its 2016 industry forecast. In its Dec. 13, 2015 article, “Entrepreneur’s Franchise Forecast,”the magazine makes some interesting picks. Salon suites, for example, is one of the industries that it picks as one of the 10 best to invest in during 2016.
“By giving salon professionals the opportunity to be in business for themselves, salon-suite rentals have emerged as a growing trend in the personal-care sector,” wrote Entrepreneur magazine reporter Tracy Stapp Herold. “While a few franchises dominate the field, there are plenty of competitors ready to step in.”
The other nine industries that Entrepreneur magazine selects as the most promising for 2016 are:
* Baked goods.
* Children’s entertainment.
* Men’s grooming.
* Outdoor pest control.
* Property management.
The magazine article lists franchise opportunities in all 10 industries. It might not be a bad idea to compare the franchises on the list with the list of best franchises in the magazine’s 2015 Franchise 500 Rankings. The magazine’s 2016 rankings aren’t out yet, but typically the franchises that were the best in one year are still excellent franchises the next year. The magazine’s 10 best franchises in 2015 were, in order, Hampton by Hilton, Anytime Fitness, Subway, Jack in the Box, Supercuts, Jimmy John’s Gourmet Sandwiches, Servpro, Denny’s Inc., Pizza Hut Inc., and 7-Eleven Inc.
Similarly, the lists compiled by Forbes magazine in its June 17, 2015 article “Complete List: The Best And Worst Franchises To Buy, 2015” are still probably relevant for people who are looking for a franchise opportunity in 2016. The article lists:
* Brightway Insurance, Maid Pro, and Right at Home as the best franchises that cost less than $150,000.
* Jimmy John’s, Jet’s Pizza, and Marco’s Pizza as the best franchises that cost between $150,000 and $500,000.
* Sola Salon Studios, Massage Envy, and Firehouse Subs as the best franchises that cost more than $500,000.
You’ve noticed, of course, that restaurants are prominent on the best franchises lists. CNBC reports, though, in its article “6 hot restaurant franchises to watch in 2016” that Technomic, a food industry consulting firm, focuses on regional chains in the early stages of development when it compiled a list of franchisees to watch in 2016. The six hot restaurant franchises are CREAM, Famous Toastery, Little Greek Restaurant, R Taco, Slim Chickens, and Blaze Pizza.
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