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Many business experts will be prognosticating over the holiday season over which franchises will be the blue chip investments for the next
decade. One of the franchise industry’s most trusted barometers has
been released. This analysis of the best performing business out there will tell us a lot about which franchises are primed for a successful era duing the Teens.

The Enrepreneur Franchise 500 is one of the most eagerly anticipated examinations of the state of franchising and the magazine has just released its rankings for 2010. The magazine has given us much to think about for the coming weeks. A hotel chain in the top five. The rise and rise of the sandwich franchise. The industry shaking off the worst effects of the recession. These are some of the talking points that will have intrigued many people in franchising.

What’s interesting is that these rankings also mirror Franchise Direct’s Top 100 Global Franchises in a few ways. Our top three global franchises are also the top Entrepreneur’s top three (although the leaders have been flip-flopped). There’s clearly a correlation between global superiority and top franchising results. Also we were happy to see that Jani-King, one of the top non-QSR franchises on our list, made the Top 10.

We’ll have much more to say about these rankings in the New Year. For now, here are Entrepreneur’s Top 10 for 2010:

1. Subway
2. McDonald’s
3. 7-11
4. Hampton’s
5. Supercuts
6. H&R Block
7. Dunkin’ Donuts
8. Jani-King
9. servpro
10. 10. am/pm

Here’s some good news for franchisees and business-owners going into the holiday break. Congress has extended some critical SBA loans that were set to expire by the New Year.

The Wall Street Journal has done some excellent reporting on the story. These loans may only be extended until February for now, but in reality, this will be a big help for businesses struggling to make it to 2010. These were loans created under last February’s Recovery Act and essentially they raised the government’s guarantee on SBA loans from 90% to 75%.

In a press release, Mary Landrieu (D-La.) said: “Small businesses have been left in limbo since the funding ran out. [The legislation] will provide a lifeline to small businesses in need of credit.”

There was a lot of lobbying done in Washington to get these loans extended, so while the timespan is somewhat short, ultimately, it shows that people on Capitol Hill are still taking the needs of small businesses into account.

On this positive note, we wish all a happy and safe holiday season and look forward to another happy year of franchising in 2010.

Last week’s Franchise Outlook 2010 provided a very concise forecast for the franchise market for the coming year. There is light at the end of the tunnel, but we still have a journey in front of us before we return to the headier days of 2005 and 2006.

What will the franchise community do to bring about the conditions for its next successful era? The IFA specifically called for the franchising community to come together and pool its know-how for the betterment of the whole industry in its outlook for the next year. The 2010 IFA Convention will offer the first opportunity of the year to do so.

Online registration has opened for the 50th IFA Convention. It will be held in the Convention Center in San Antonio, Texas. The IFA Convention is one of the biggest franchising events on the calendar, and it should be an even bigger occasion this year, given the landmark anniversary. We will provide more info on discussions, speakers and roundtable meetings as they are released.

It’s an outstanding occassion to get to know your fellow franchisors and franchisees and we recommend you do everything you can to get to San Antonio in the first week of February.

2009 has been a big year for international franchising. If anything, it’s a sign that the world is getting smaller by the day. But it doesn’t mean that relocating your franchise to a new country will lead to overnight success. As franchises reach more and more exotic locales, you’ll have to bring a brand new culture around to a new way of doing business.

Food franchises have been the most bullish about international expansion, but in many ways, they face the greatest challenges in cracking the developing world. There might be billions of people living in India and China, but beyond the novelty value, how interested are locals in eating fried chicken or double-cheeseburgers on a regular basis? Not only do these cultures have their national foods but they have their own eating habits. Food franchises must lay the ground for a new alternative.

It is no coincidence that the rise of franchising in America coincided directly with the rise of the American middle class. Franchising is perfectly suited to the needs of middle class life. We now see America’s biggest franchises trying to fully establish themselves in a host of developing economies with a growing entrepreneurial class. These are interesting times.

Russia, the world’s biggest country, is one of the countries that McDonald’s and Burger King are specifically eyeing. Their challenges, as Reuters recently outlined, are quite obvious: 70% of people Russians don’t eat outside the home. Now if you’re a ‘glass half-empty’ international franchisor, maybe you stay away from Russia, figuring that these eating traditions are fixed and rooted in time. But McDonald’s and Burger King are “glass half-full” franchisors. They look at this population of 141million and see a massive chunk of the population ready to trade in gulash for Whoppers. It’s the kind of ambition that franchises need to thrive abroad. Remember, restaurants were a novelty during the Communist years. BK are so bullish on Russia they’re opening 40 units in 2010.

And Russia isn’t the only market appetizing QSR franchises. Yum Foods, owner of Taco Bell and KFC, are planning to open 1000 units in India in the next few years, the Wall Street Journal reports. It’s a big leap and even greater proof that America’s food giants think that the world wants “American” food. And as the global economy creates a new middle class in countries like Russia, India and China, I’m tempted to believe them.

Way back in 1985, John Naisbitt, the author of Megatrends, wrote the text “The Future of Franchising: Looking 25 Years Ahead to the Year 2010 for the IFA. Naisbitt stated that franchising was certain to grow, and, as the IFA have acknowledged, he was right. But where does franchising go from here? That was the subject of yesterday’s 2010 Economic Outlook.

There’s loads of material in the PriceWaterhouseCoopers Outlook and we’ll hope to touch on some of the key findings here. The forecast for the next year calls for “slow growth”. I don’t think this will shock anyone who’s been following the industry closely. The recession may be behind us, but the lending market is still harsh, and political issues, such as the environment and coming health care legislation, don’t make things easier.

The feeling is that the franchising sector will mirror the small gains the domestic economy as a whole is slated to make.

The sectors that are predicted to experience the highest growth are Personal Services, Quick Service Restaurants and Business Services. Job losses are predicted in the lodging sector, while real estate industry should see some new jobs added.

There’s also a poll of franchise owners on the state of the industry. A small majority expects the economy to improve in 2010 and there has been a 15% hike in the number of business owners that feel that the economy’s performance will be “somewhat good” in the next 12 months.

As far as strategies for the future go, the IFA have a four part plan that reads like this:

• To shape the legislative, regulatory and public policy decisions that impact franchising.
• To enhance and promote the unique image, attributes, and benefits of franchising and of the association among key audiences.
• To provide programs and services that provides value to members
• To increase membership across all franchise sectors.

These are all pretty interesting and hopefully, if delivered can ensure the future growth of franchising. As you’d expect, there’s plenty of reaction in the media. CNBC did an interesting interview with Matthew Shay about the Outlook, and also spoke to a UPS Store franchisee. Meanwhile, over on the Uptake Travel Industry blog, Julie Sturgeon bemoans the problems with lodging sector, while providing an overview on the report. Thankfully, the IFA have provided a fact sheet for anyone looking for specific figures on the report.