The franchise industry is constantly evolving, and as a franchise business owner, it is important to stay on top of the latest trends. In 2023, several trends are expected to take hold and shape the industry. From franchise industry growth to concerns about supply chain disruptions and labor shortage, these trends will influence how franchise owners operate their businesses and interact with customers. Let’s explore these trends in more detail.
2023 Franchise Trends
In our research, we have identified six key franchise industry trends that are expected to shape the landscape of franchising in 2023.
Franchise Industry Growth
According to the 2023 economic outlook report by the International Franchise Association, the franchise industry is expected to experience continued growth in terms of jobs and units. This growth is attributed to several factors, including the increasing popularity of franchising and the stable economic conditions in the United States.
The report predicts that the franchise industry will add nearly 22,000 new franchise establishments in 2023, an increase of 2.6% over the previous year. This growth is expected to create over 257,000 new jobs, a rise of 2.5% from 2022.
The report also highlights several industries expected to experience significant growth in 2023, including food, personal, and business services. These industries are expected to account for a substantial portion of the new franchise establishments and job growth.
This growth in the franchise industry is also expected to impact the overall economy positively. Franchise businesses are expected to contribute over $500 billion to the U.S. economy in 2023, an increase of 4.8% over the previous year.
Top Franchise Categories
The franchise industry is poised for growth in 2023, with several categories expected to experience significant expansion. According to a recent report by Entrepreneur, the top five hot franchise categories for 2023 are diverse and reflective of the changing needs of consumers.
- One category predicted to experience growth is self-care, which includes franchises that offer beauty, wellness, and fitness services. As consumers prioritize their health and well-being, this category will thrive in 2023.
- Another category expected to grow is electronics and gaming, which includes franchises that offer electronics repair and sales and gaming services. The increasing popularity of electronics and gaming among consumers is driving the growth of this category.
- Pet services is another category predicted to experience significant growth in 2023. This category includes franchises that offer pet grooming, boarding, and training services, reflecting the increasing number of pet owners and the growing demand for high-quality pet care services.
- The senior care category is also expected to grow as the population ages. This category includes franchises that offer home healthcare and senior care services, meeting the increasing demand for healthcare services among aging populations.
- Finally, the home improvement category is predicted to grow in 2023 due to increasing demand as consumers prioritize their living spaces. This category includes home repair, remodeling, and maintenance franchises.
Adapting to Supply Chain Disruptions
Supply chain disruptions have been a significant challenge for businesses over the past few years, and the trend is expected to continue in 2023. According to a recent report by Accenture, supply chain disruptions are projected to increase in frequency and severity due to factors such as climate change, geopolitical risks, and changes in consumer behavior.
For franchise owners, supply chain disruptions must be a top consideration when managing their businesses. Franchise owners must have contingency plans to address disruptions, such as identifying alternative suppliers or diversifying their supply chains.
One way franchise owners can adjust to supply chain disruptions is by implementing technology to monitor their supply chains in real time. This can help identify potential disruptions before they occur and allow franchise owners to take proactive measures to address them.
Another way that franchise owners can adjust to supply chain disruptions is by working collaboratively with suppliers and other partners in the supply chain. This can help mitigate risks and ensure all parties work together to address disruptions.
Dealing with Labor Shortages
In addition to supply chain disruptions, another trend that franchise owners will have to deal with in 2023 is labor shortages. According to a recent survey by IFA and FRANdata, many franchises are facing difficulty finding and retaining skilled workers. This trend is expected to continue in 2023, creating significant challenges for franchise owners.
The impact of labor shortages on franchises can be significant. Franchise owners may struggle to find workers to fill critical positions, leading to reduced productivity, decreased revenue, and increased costs. In addition, labor shortages can make it difficult for franchise owners to expand their businesses or open new locations.
To address labor shortages, franchise owners must be creative and proactive. One approach is to focus on employee retention by offering competitive wages, benefits, and other incentives. This can help attract and retain skilled workers and ensure that franchise owners have the workforce to operate their businesses effectively.
Another approach is to invest in training and development programs to help existing employees develop new skills and take on new organizational roles. This can help franchise owners fill critical positions and improve employee morale and engagement. For example, you can use FranchisePhones® call coaching tools to train employees in handling customer calls.
In addition, franchise owners can explore alternative labor sources, such as automation and outsourcing. By leveraging technology and third-party services, franchise owners can reduce reliance on traditional labor sources and address labor shortages cost-effectively and efficiently.
Rise of Technology
Another trend that franchise owners need to keep an eye on is the increasing role of technology in the industry. With the growing importance of digital marketing and online ordering systems, franchise owners must invest in technology to enhance the customer experience. Failure to adapt to this trend may result in losing customers to more tech-savvy competitors.
One way that franchise owners are using technology to enhance their businesses is through the use of mobile apps. Mobile apps allow customers to easily place orders, track deliveries, and access loyalty programs. This provides a more convenient and seamless experience for customers, which can lead to increased customer loyalty and repeat business.
Another way technology is changing the franchise industry is through artificial intelligence (AI). AI can be used to analyze customer data, identify trends, and provide personalized recommendations. This can help franchise owners better understand their customers’ needs and provide more targeted marketing and advertising campaigns.
Franchisees are also embracing the capabilities of everyday technology like smartphones by incorporating text messaging into their operations and marketing. Text messaging allows franchise owners to communicate directly with customers, providing updates on services, promotions, and new offerings. As text messaging becomes more ubiquitous, franchise owners who incorporate it into their operations and marketing strategies can differentiate themselves from competitors and stay ahead of the curve. If your current phone system does not allow for text messaging, it’s time to look into a VoIP solution like FranchisePhones®.
Consumer Expectations
The franchise industry is also impacted by changing consumer expectations, with 2023 expected to see a focus on personalized, localized, and frictionless experiences. Consumers today seek more than just products or services; they want a unique and memorable experience. Franchise owners must adapt to this trend by rethinking their business models and offering personalized experiences beyond simply selling products.
In addition to personalization, providing a seamless experience is crucial to meeting customer expectations. Customers expect a smooth and convenient experience, whether interacting with a franchise in-store, online, or over the phone. Franchise owners must optimize operations to provide a seamless experience across all touchpoints.
Finally, customer service remains a key priority for customers, so franchise owners must prioritize it to meet customer expectations. By providing exceptional customer service, franchise owners can build trust and loyalty with their customers, leading to increased customer satisfaction and retention.
Stay Informed About Franchise Industry Trends
In summary, the franchise industry is expected to experience several trends in 2023 that will shape how franchise owners operate their businesses. By staying informed and adapting to these trends, franchise owners can position themselves for success in 2023 and beyond.
