Franchisees Profit from the Hot Children's Market

Despite the downturn 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

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 both toy sales and restaurant visits with children declined in the 4th quarter of 2008. 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, art and music programs; and secondhand children’s clothing, accessories and toys.

Tutoring and educational programs are likely to see continued growth as school budgets shrink in response to the economic crisis. With class size increasing, and parents increasingly time-crunched as they worry about keeping their jobs, there is 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 are watching 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 and My Gym get younger children active, while youth sports leagues like those i9 Sports provides keep older children fit and healthy.

While most of the hot areas for children’s businesses are in the service arena, resale stores are a bright spot in children’s retailing. In a survey in late 2008 by the National Association of Resale and Thrift Shops (NARTS), 74 percent of store owners said business had increased compared to the prior year. Cost-consciousness is one reason middle- and upper-income parents are discovering resale shops; concern about the environment is another. 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 nearly 6 million in the next decade -- from 74.2 million this year to 80.4 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. 1 in AllBusiness.com’s 2009 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].” If you’ve got what it takes, the rewards you can reap running a children’s franchise business are anything but kid stuff.

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