Consumer confidence and positive economic factors boosted the outlook for the overall franchising industry in 2018. Closet franchises, in particular, predict the strong growth in the industry will continue into 2019.
 
According to the Franchise Business Economic Outlook for 2018, published by the International Franchise Association, expectations for the overall franchise industry projected growth this year in many areas:
  • Franchise establishments were expected to grow to 759,000, an increase of 1.9 percent
  • Franchise employment was anticipated to increase by 3.7 percent
  • Gross domestic product (GDP) generated by the franchise industry was predicted to beat U.S. GDP by 6.1 percent, or $451 billion
  • The industry was expected to contribute about 3 percent of the nation’s GDP in nominal dollars
  • Output by franchise businesses was anticipated to increase by 6.2 percent to $757 billion
However, Joe Matthews, CEO of the Franchise Performance Group predicts that some market conditions including the full employment level, inflation rate and a slight slowdown in franchise unit growth could have had an impact on some of those franchise growth projections.
 
Matthews made the following prediction in a blog post stating that forward-thinking franchises will overcome that by funding “initiatives which will grow franchisees’ margins or ease franchisees’ operational burdens, making them expansion ready so franchisors can realize new royalty revenue streams. Smart franchisors know that franchisees will continue to expand when they have confidence in their model and have a clear line of sight to achieving their financial objectives.”
 
Matthew adds that the competitive market will lead to “franchisors (creating) new and more innovative offerings which better align franchisees and franchisors risk and reward, and reduce the franchisees’ cost of entry.
 
“Franchisors will find new and more innovative ways and craft different offerings to attract new franchisee talent who normally would not consider investing in a franchise, allowing franchisors to find exclusive pockets of potential franchisees to recruit from the broader franchisor market can’t reach,” he says.
 
However, closet and storage franchise firms are ahead of the curve and are already finding ways to differentiate their product offerings and attract talent. And many of those firms have experienced strong growth this year that they predict will continue into 2019.
 
Closets & Organized Storage magazine spoke with several closets and storage franchise executives to get their thoughts on the state of the closets and storage franchise industry and what’s ahead for the upcoming year.
 

Joe Lonardo, founder & CEO Bella Systems

What’s your forecast for the State of the Industry in 2019? And how will that impact Bella Systems? 
We’ve seen strong trends of consecutive year-on-year growth. It can be tough to predict a specific percentage but all signs are that Bella Systems will continue to see strong growth in 2019. We already have a solid base of scheduled projects and our developer/development pipeline looks as healthy as I’ve seen it. 
 
What overall design trends are you seeing for the industry in general and your franchises in particular?
We are happy to see a continued increase in demand for textured finishes v. the standard white melamine and more unique hardware selections. Clients appear to be more willing to push themselves creatively and we’re enjoying folding this into our own design processes.
 
What special initiatives and/or projects are you planning to implement in 2019? I made a commitment to myself for 2018 to diversify our offerings beyond standard closets and pantries and we’ve got a great new base of specialty products coming to market. I am particularly excited about wine cellars, garage solutions and beautifully designed Murphy beds (that’s not something we’ve heard before!).
 
What is the state of the closet & home organization franchising business? The franchises we partner with have seen a healthy increase in higher revenues per closed sale. I attribute this to our continuing to improve efficiencies with the design process and our marketing efforts. We’re simply getting better at building high-quality leads and healthier pipelines. 
 

Bob Lewis, founder/CEO & owner of Closet & Storage Concepts and More Space Place

What’s your forecast for the State of the Industry in 2019? And how will that impact Closets and Storage Concepts/More Space Place?
I believe that 2019 will be another strong year for our industry as the consumer continues to experience low unemployment and increasing wage growth. As consumer confidence continues to drive home purchases and home remodeling services, that will result in continued growth for the closet & storage industry. 
 
What overall design trends are you seeing for the industry in general and your franchises in particular?
The consumer is demanding more accessory options and is moving away from basic melamine to textured and embossed-in-register finishes. We expect this trend to continue for our franchisees.
 
What special initiatives and/or projects are you planning to implement in 2019?
We continue to look for more ways to implement technology to streamline our operational processes and improve efficiencies in our manufacturing operations, to ensure that we can offer the highest quality products and the best possible prices to our franchisees. As the labor market continues to tighten, the need for enhanced productivity is more critical than ever before. 
What is the state of the closet & home organization franchising business? The state of the closet & home organization franchising industry is stronger than ever. By leveraging our purchasing power as a national system, we are able to provide lower operating costs to our franchisees so that they are more profitable than ever before. Our relationships with our vendor partners are enhanced by our long-term commitment to the industry and our ability to provide consumer feedback from all regions of the United States, in order to help them drive product development to refresh the industry. 
 

Shirin Behzadi, CEO for Home Franchise Concepts, Tailored Living, parent firm

What’s your forecast for the State of the Industry in 2019? And how will that impact Tailored Living?
The company expects]continued growth in garage enhancement in order to provide homes with more storage, and free up floor space in the garage for hobbies and activities, [and] growth in Murphy bed sales as consumers seek more efficient ways to use their existing living space.
 
What overall design trends are you seeing for the industry in general and your franchises in particular? 
Lighting is definitely trending as lighting systems are becoming simpler to install, more energy efficient, and switch innovation is making lighting systems smarter. Other trends include matte finishes, Blue and Gray tones, and simple decorative lines are replacing busy ornate surfaces. The biggest change in hardware we’re seeing is in the growing popularity of do-it-or-me hinges and drawer slides. Not so long ago, self-closing hinges and drawers were upgrade options found mostly in premium systems, now expected as a standard feature. In garage floor coating, dual color systems and borders are growing in popularity, as are colors that complement the family’s favorite sports team or past time.
 
What special initiatives and/or projects are you planning to implement in 2019?
Design software enhancements will help consumers be more comfortable with their buying decision. Rapid product innovation with a focus on clever storage systems and forward-thinking colors and patterns will provide consumers with an enhanced shopping experience. We’re also pushing forward with smart technology in the garage to offer consumers more storage solutions at their fingertips with overhead lifting devices.
 
What is the state of the closet & home organization franchising business?
Expansion beyond function and into an emphasis on aesthetics and product personalization will continue to separate the leaders from the followers. Innovation leaders are accelerating consumer product awareness which broadens demand and lifts the industry as a whole.
 

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