Franchisees Profit from the Hot Children's Market

Karen Axelton
Wed, 17 Jun 2009 00:00:00 +0000

Despite the recent trouble in the economy, businesses that cater to children are still a thriving industry. From tutoring services to children’s sports leagues and kids’ fitness programs, entrepreneurs who provide child-related services are seeing success -- and the promise of even more growth in the future.

It’s true that parents are cutting back on some discretionary spending when it comes to their kids. The NPD Group, which tracks consumer spending, reports that toy sales were down by 0.8 percent in 2009. However, many toy retailers feel that given the economy, the toy industry is in a relatively strong position. NPD also notes that restaurant sales for 2009 were weak -- which means families probably aren’t dining out as often. But there are several key areas where parents are still spending. The Top 10 Children-Related Franchises in the AllBusiness Franchise AllStars listing reflect these priorities, including tutoring services and education-oriented preschools; fitness programs; extracurricular play and music programs; and secondhand children’s clothing, accessories, and toys.

Tutoring and educational programs are likely to see sustained growth as school budgets continue to shrink. With class size increasing and parents more and more time-crunched as they worry about household finances, there’s growing demand for tutoring to keep children from falling behind. The large immigrant population is also contributing to the growth of tutoring services, as more children need help learning English as a second language.

If you think upscale parents are the only market for tutoring services, think again. The No Child Left Behind Act set aside federal funds to pay for free tutoring for low-income children in failing schools. And middle-class parents who have watched their kids’ college funds shrink are more determined than ever to help their children do better in school so they can compete for scarce college spots and scholarships. As early as preschool, parents are willing to pay for academically-oriented schools that give their kids a head start.

Nearly as big a concern as education is childhood obesity -- a hot-button issue in recent years. School budget cutbacks and stricter testing requirements mean there is less time in the school day for physical education. According to the Centers for Disease Control, only 28 percent of adolescents participate in physical activity during the school day. As a result, parents are turning to outside activities to encourage a healthy lifestyle at a young age. Programs like The Little Gym and My Gym get younger children active, while youth sports leagues like those at i9 Sports keep older children fit and healthy.

Most of the hot areas for children’s businesses are in the service arena, yet resale stores are also a major market in children’s retailing. In a survey by the National Association of Resale and Thrift Shops, 41.6 percent of stores selling children’s merchandise said business had increased in the fourth quarter of 2009 compared to the same time in 2008 -- yet 44.2 percent had a decrease in sales. NARTS reports that this is due to the difficulty of complying with the Consumer Product Safety Improvement Act signed in 2008, which puts restrictions on items that could contain lead. However, in the past year the government has made compliance a little easier for resale stores.

Despite the setbacks, cost-conscious middle- and upper-income parents are still discovering resale shops; concern about the environment is another factor in their popularity. Environmentally aware tweens and teens have warmed to the idea of buying used clothing to help the planet.

The number of children under 18 in the United States is projected to grow by 7 million in the next decade -- from about 75 million this year to nearly 82 million in 2020 -- and the opportunities in children’s businesses will grow along with them. What are some of the reasons to consider buying a children-related franchise, as opposed to starting an independent business? The power of a franchisor’s brand name, the support a franchisor offers, and the training that can get even industry novices up to speed quickly are all important factors.

“Backed by an operating system that has been refined over 30 years, Sylvan franchisees benefit from an unparalleled training program that prepares franchisees, with or without education experience, with the tools they need to succeed as business owners,” says Curt Hapward, vice president for franchising at Sylvan Learning (ranked No. 3 in AllBusiness.com’s 2010 list of Top 10 Children-Related Franchises). “Sylvan supplies all of the tools to compete effectively in the market, including new product development, communication channels, information systems, and a $40 million advertising and marketing program.”

What qualities are needed to succeed as a children’s business franchisee? It’s important to enjoy working with children and be dedicated to helping local families in your community, says Hapward. In addition, he says, successful franchisees have “a passion for entrepreneurship, great business and sales skills, and the ability to balance being a boss and a member of a [franchise system].”

For a list of kid-friendly franchises, visit the Children's Franchises section of the AllBusiness.com Franchise Directory.

Karen Axelton is chief content officer at GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses.