If you want to find a great opportunity in franchising, it’s worth asking two questions: What categories are booming (or about to boom)? And why?
We can certainly answer the first one. At the end of each year, Entrepreneur looks across the franchising space and the world at large, and analyzes industry trends and year-over-year unit growth. Then we produce a list of franchise categories that we expect to thrive next year. You can see that full list of predictions, along with the brands inside each category, here.
But why are these categories so hot? For that, we must turn to some industry insiders.
“When you look at the category level, it is always a reflection of larger economic factors that are driving consumer behavior,” says Edith Wiseman, president of FRANdata. “All of these can be tied back to the overall change in how consumers are viewing their lives, and how they want to spend their time and treat themselves.”
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Sometimes, the answers are obvious. If you look at our list of predictions, you’ll see a mixture of old and newly thriving categories. Some of them, like pets, have been hot for years, and are clearly tied to the way COVID shifted people’s behaviors. (Remember all those pandemic puppies?) But there are also newly growing categories, which either weren’t surging before or are just beginning to experience rising levels of competition.
In particular, there are four ascendent categories worth paying attention to: beverages, STEM enrichment, sports, and meal preparation and delivery spaces.
If you want to understand what’s driving the franchise industry today, and what might be most important for it tomorrow, those four categories can tell you a lot. That’s why we’re singling them out in this story. We called the experts to ask: What’s driving all that business, and what do we need to know?
The answers — along with insights on what it’s like owning a business in these spaces — are below.
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Why Beverages Are Booming
Short answer: People are thirsty!
Long answer: People are thirsty for something very specific.
Beverage franchises are doing well as a whole, but much of the industry’s growth is fueled by one kind of drink: boba tea (also known as bubble tea). It originated in Taiwan, made with tapioca pearls and nearly endless combinations of flavorings and additions. It’s also a perfect drink for our social media age, with colorful — and photogenic — presentations that are easy to share.
“If you ask somebody over the age of 40 or 45, there’s a good chance they haven’t heard of boba or bubble tea, unless they have teenagers in the household,” says Geoff Henry, president of the Americas for the brand Gong cha. “But if you ask someone under 30, almost everyone has tried it.”
To appreciate boba tea’s rise, just look at Gong cha’s history. The brand opened its first store in Taiwan in 2006, and then opened its first overseas outlet three years later in Hong Kong. Growth was rapid; by 2019, after 10 years of expansion, it had opened more than 1,100 global stores. Now it’s nearly doubled that, surpassing 2,000 locations in July, with about 105 to 120 stores expected to open this year in the Americas. “We think next year we’ll open another 150 in the Americas,” Henry says. “Two-thirds of that will be in the U.S.”
Many other boba brands are following suit. The brand Kung Fu Tea, founded in 2010, is now approaching its 400th store opening — and is raising its profile even more by selling canned drinks. “We have an energy can that sold out in the first six months, and the only two places we had it were on Amazon and in-store,” says Kung Fu Tea marketing manager Matthew Poveromo. “I think in the next year, we’d like to move further into the ready-to-drink category, building out more flavors and more distribution, maybe through grocery channels. What would be more accessible than seeing Kung Fu Tea on your Walmart shelf?”
But boba isn’t the only drink on the rise. The franchise HTeaO caught fire by innovating on iced tea, and by the end of this year, it expects to have 95 locations in nine states. Other drinkable opportunities will surely follow.
“You think of coffee and what’s happened there, with the inclusion of flavorings and syrups, and now there’s all the iced and cold beverages that are out,” says Heath Nielsen, president of HTeaO. “There’s enough variety coming in to feed everybody.”
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A Franchisee Says…
Tracy Vitela opened a Just Love Coffee Cafe franchise with her sister near Nashville, Tennessee, in 2021. This year, they are on target to surpass $1.5 million in sales — and have three more locations opening in the area by the end of 2023.
Why do you think demand for beverages is booming?
I think more people nowadays, post-COVID, are dreaming bigger and thinking outside the box. You have AI and ChatGPT and all these different expansions happening. I believe that those dreams start in places like coffee shops.
What has most helped your franchise grow?
The biggest things are service and quality. I had a guest yesterday who asked to have his coffee extra hot. He asked me to warm it up, and I said, “No, I’ll just remake it.” I may be throwing away 60 cents, but he’s going to remember that I wanted him to have a quality product.
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Why STEM Enrichment Is Booming
Parents have thought about STEM for a long time — but with artificial intelligence now on so many people’s minds, educational services have gained a new urgency.
“Parents are not feeling like they’re getting the competitive edge just by going to schools, so they have to have supplemental education to prepare the kids for the world of tomorrow,” says Edith Wiseman, president of FRANdata.
Enrichment franchises are rising to fill that need. “What we’re after is not really giving kids an opportunity to learn coding as a vocation, but to give them an understanding of the world around them,” says Colin Fitzpatrick, vice president of global development at Code Ninjas, a kids’ coding education and enrichment franchise. “The same way a kid takes science classes, it’s important that every kid has a foundation in computer science and computational thinking.”
Code Ninjas is seeing results: It was founded in 2016 and started franchising the same year, and now has about 385 locations in the U.S., Canada, and the U.K.
Enrichment franchises also have another advantage: There’s a steady stream of qualified franchisees. As teachers look for opportunities outside traditional school systems, many are finding a nice fit in franchising.
Jeff Hughes, president of Skill Samurai, says 75% of his new franchise owners in the past year were teachers. “One of them was a principal,” he says. “They’re people who want to keep teaching, but they may not like the politics or the current setup of the schools.”
A similar dynamic is happening at Challenge Island, which now has more than 150 franchises in 31 states. Many are run by former educators who look forward to far surpassing their former $50,000 teaching salary. “This year, we’ll have people making $300,000 and $400,000,” says Challenge Island founder and CEO Sharon Duke Estroff.
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A Franchisee Says…
Danish and Mansi Majeed, both from the tech industry, bought 10 Challenge Island franchises in the Seattle metro area this past year. “We saw it shaping up as a life mission,” Danish says. “We wanted to buy all of Washington state.”
Why do you see your STEM/STEAM franchise as a life mission?
We have a 10-year-old and a 12-year-old. They respond to things by pressing a button, whereas when we were kids, we were throwing a sheet over a couch and creating a fort, or tying a towel around our neck and making a cape out of it. I feel like devices are robbing kids of creativity.
How have local educators reacted to your franchise?
They all agree that we have these problems, and they can’t address them within the construct of the public school system. Having an enrichment program that addresses that is mind-blowing for them.
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Why Sports Are Booming
Last year, Entrepreneur identified recreation as a booming franchise category. But that was a broad group, including everything from DIY art studios to trampoline parks.
As we looked more closely at the category this year, we saw a spike in a very particular area of recreation: sports!
Why are sporting franchises so popular? There are many theories — from the rise of specific sports to the healthier pursuits of consumers.
Of course, no sport has taken off recently the way pickleball has. In 2021, about 5 million people played the game. Today, it’s more than 40 million — and that surge has spawned a growing number of pickleball franchises.
“We do introductory classes for the public for free, twice a day,” says Ace Rodrigues, founder and CEO of Pickleball Kingdom. “We get people who say they were an athlete 20 years and 20 pounds ago, and they’re asking about leagues and tournaments because it’s so much fun.”
Pickleball Kingdom’s flagship location in Arizona opened in May 2022. A dozen franchises are now being built nationwide, with 70 awarded.
But more traditional sports are also seeing a surge — especially if a franchise adds a unique twist or expands the experience.
X-Golf is a good example. It offers golfers a place to refine their swing with indoor simulators, but it’s also much more. “You can play famous courses, interactive games, tournaments across the country, all inside your own pod or room,” says X-Golf president and CEO Ryan D’Arcy. “They can drink, have fun, there’s a full bar, and we have food.”
X-Golf started franchising in 2015. Today, it has 84 locations with 50 in development. D’Arcy expects 100 to be open by the end of this year. A location inside Milwaukee’s American Family Field, where Major League Baseball’s Brewers play, opened in September 2022.
D-BAT is another great example: The franchise operates indoor baseball-and softball-training facilities, and casts a wide net — working with everyone from Little Leaguers to MLB prospects. There are batting cages, coaching, special events, and more. Founder and CEO Cade Griffis thought that, with interest rates rising, his franchisee interest would slow down in 2023. But the opposite happened. “Our biggest year pre-COVID was 2019. We opened 22 stores,” Griffis says. “But this year, we’ve already opened 24, and I have 32 under construction.”
He thinks COVID is still on people’s minds, and that’s driving them to sports. “People remember being cooped up and don’t want to go back to that,” Griffis says.
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A Franchisee Says…
Ben Feret has been a longtime real estate investor, and then decided to fill some of that real estate himself: He became an X-Golf franchisee in 2019, and now owns five locations in Minnesota, with a sixth opening in December.
Why is interest growing in indoor golf?
COVID really catapulted the golf industry in general. For a while, golf was the only thing people could do outside.
In Minnesota, indoor golf makes sense with the weather, right?
We have about 150 realistic golf days in Minnesota. The rest of them are too cold, too hot, too rainy, or too windy. That leaves us with about two-thirds of the days that are ideal for indoor golf.
What’s it like being part of a growing franchise?
Now that [X-Golf is] approaching 100 stores, we have national tournaments. The prize pools we can offer are pretty awesome. We’ve sent folks over to Ireland, we’re giving away a trip to Cabo — that’s another piece we can leverage with our size.
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Why Meal Prep/Delivery Is Booming
To understand why this category is booming, just consider your own dining-in habits.
“Before the pandemic, I think the only thing that I ever had delivered to me was pizza,” says Mark Siebert, CEO and franchise consultant with The iFranchise Group. Then Siebert, like many people, started having everything delivered. “It wasn’t that much more expensive to get the food, and it became an ingrained behavior in terms of what I was doing.”
That laid the foundation for a new generation of food service, he says. People started to think differently about their meals — whether they’re delivered, or even picked up as meal kits.
“Customers can come in our stores, purchase one meal and heat it up to go, or purchase 10 or 15 meals for the entire week and have everything you need for the week,” says Austin Evans, CEO of Lean Kitchen Company, who started franchising in 2018 and now has 33 locations open nationwide and 60-plus sold and in development. Customers can also order online from their local Lean Kitchen, and more than 30% now do. For some store owners, it’s near 50%. “That’s been the most notable shift: It’s about convenience,” Evans says.
Convenience, along with quality and value, is also driving growth in the prepared meals segment at New York Butcher Shoppe, says Joseph Giordano, vice president of corporate and franchise development. The stores sell a combination of traditional meat cuts, specialty groceries, wine, and prepared meals.
“The prepared meals, right now, represent over 20% of our product mix,” he says, “and that continues to grow and grow each year.”
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Two Franchisees Say…
After working for decades in department stores, Mike and Kristen Murn changed careers — and in late 2022, they became the first franchisees of Delish Delivered. Their territory is west of Milwaukee, where the company’s founder is based.
How has your career shift felt?
Mike: I’m used to sitting in an office for 10 or 12 hours a day, and now I’m talking on the phone with customers about how they liked the meals. Having that connection with the customer is such a great, great feeling.
Why did you choose Delish Delivered?
Mike: What we’re providing really helps people. Some aren’t able to cook. Some don’t have time to cook. Some people want a great-tasting meal but don’t want to cook.
Kristen: We consider ourselves an integral part of the community. This is helping our friends, our neighbors. It’s getting locally prepared meals delivered right to their doors.