Sponsored Section: Franchise Outlook

Opportunities to Watch in 2010.

A slowly improving economy and gradually easing credit market figure as the biggest influences in franchising in 2010.Morereadily available loans make purchasing a franchise possible for more people,saysfranchisingconsultantMichaelSeidof WestHartford, Conn. And lingering high unemployment and uncertain employment will continue to make owning a franchise look like a way out of the employment rat race.

"People will start to look at alternatives," says Seid. "The natural alternative is the great American dream of business ownership. That's when franchising starts to become attractive." Seid, who bases his forecast on experience in franchising during past recessions, says continuing tight credit makes this one different. But he expects banks to start lending again."Once that happens," he says,"then we're back in a normalrecovery cyclefor franchising and small business development."

Demographic and other trends will play major roles in deciding which opportunities will be the ones to watch. Seid expects to see robust interest from consumers and franchisees in child and elder care, moderately priced but high quality family dining, and medical care.

Investors stung by market downturns and suspicious of Wall Street scandals are looking closely at owning businesses as investing alternatives, Seid continues. That should fuel growth of multi-unit franchise organizations.

Finally,he expects major consumer brands that have previously relied on corporate-owned locations to get into franchising in a big way. Seid says he's already working with some, although hewon't name names."These are major brands thatyou likely shop at every day," he says. "They're in retail, high tech and a whole slew of places."

With so many opportunities, there are myriad franchises that seem to be weathering a tough economy and appealing to consumers'needs. Take Anytime Fitness. The Hastings,Minn., health club franchiser expanded from 593 to 958 locations in 2008. In January 2009, it opened its 1,000th club, just seven years after its first. Mark Daly, national media director for the company, says Anytime Fitness is now the planet's leading co-ed fitness chain.

"We currently have more than 1,200 clubs open in 48 states, Canada, Australia, and New Zealand," Daly says. " By the end of the year, we will also have clubs open in India and Mexico -- and our expansion plans extend all across Europe, Asia, Latin American, and the Middle East."

Anytime Fitness offers consumers a good fitness value with convenient hours and locations, knowledgeable staff, and in-demand equipment, Daly says. Franchisees like the chance to make a good living helping people achieve health and fitness goals. Integrated security and usage-tracking systems reduce the need for employees, improving profits. As a result, Daly says, most franchisees own two or more locations. And most are pleased with the opportunity."For two years in a row,Anytime Fitness has won top franchisee satisfaction honors from Franchise Business Review," he notes.

Another health-conscious choice is Tasti D-Lite. Tasti D-Lite isn't exactly a household name -- yet. The frozen dessert retailer has, however, been around since 1987, and its combination of taste and low calories helped it achieve near-cult status in New York, where it all began. After a private equity firm bought the company in 2007, franchising veteran and former Mail Boxes Etc. CEO Jim Amos came on board to help bring Tasti D-Lite to the world.

Amos believes Tasti D-Lite has what it takes. "It is a guilt-free indulgence, which is particularly important in these economic times, and a healthy alternative at a time when obesity has doubled over the last 30 years," says Amos, CEO and chairman of the Franklin, Tenn., franchiser.

Perhaps that's why even financing constraints have not stifled Tasti D-Lite. After beginning franchising in 2008, Tasti D-Lite now has 55 locations, mostly in New York, but also Houston, Nashville, and Sarasota, Fla. By the end of 2009 they will have added Scottsdale, Ariz.;Boynton Beach,Fla.; Darien, Conn.,and Mexico City.Amos has targeted five regional markets--Atlanta, Boston, Dallas, Southern California, and Seattle -- as priority areas for development. "As we work toward our goal of building a 500-center global franchised network, we expect to nearly double in size from 2009 to 2010,"he says.

On the entertainment front, DVDNow, a North Vancouver, B.C., company that sells self-service movie-rental kiosks as business opportunities, appeals to consumers' cost-conscious side. Approximately 1,500 kiosks are operating, primarily in the United States, and recently the company began offering the opportunity to independent owner-operators. CEO Scott McInnes says the business appeals to movie-loving business types who want to latch onto a trend, including some who have hundreds of thousands of dollars to spend on a fleet of kiosks, as well as those who want to start small with a single unit.

"From an investment perspective there are not many "real" businesses that you can start for under $25,000," says McInnes. Another plus: since renting DVDs counts as relatively inexpensive entertainment, sales are counter-cyclical to the economy. "While mostbusinessesaresufferingfrom the currenteconomicsituation, our kiosks have actually experienced a dramatic increase in rentals during the recession,"McInnes says.

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