In The News
A Closer Look At Growth Trends in Franchising
Jan 14, 2012
IFA report projects positive year for personal, retail products and services
Jania Bailey, President and COO of FranNet.
Franchising keeps creating jobs and new business opportunities every year, even in the depths of a recession. Why is that?
Part of the reason: Professionals realize the diversity of opportunity franchising provides, in traditional food franchising or service franchises that meet the growing needs of demographics like the baby boomers, who are only now entering retirement age.
People understand that corporate jobs aren’t as secure or lucrative as they used to be. Since the economic collapse of 2008, professionals have turned more and more to franchising as a way to control their careers and build long-term futures for themselves and their families, options that don’t have to depend on a giant corporation’s stability or government largesse.
The recent Franchise Business Economic Outlook for 2012, prepared for the International Franchise Association by IHS Global Insight, pinpoints in their projections where they expect the growth to occur — and the franchise experts at FranNet, the international network of franchise consultants, are well-positioned to analyze what the numbers mean.
“The IFA report projects strong growth in the personal services and retail products and services segments, which we’ve seen ourselves in the last several years,” says Jania Bailey, FranNet’s president and COO. “People new to the franchising world are usually surprised to find out how many different kinds of franchises are out there, from child education to senior care to car maintenance — and market demand is growing for all of them.”
A closer look at some of the report’s numbers:
- It projects the number of U.S. franchise establishments to increase by 13,928, and for the number of jobs to grow by about 168,000. “At a time when most of the private sector remains stagnant,” Bailey says, “that’s impressive growth.”
- Franchising’s economic output is expected to grow by 5 percent, from $745 billion to $782 billion. “What’s good for franchising is good for the economy,” Bailey says. “Every new franchise creates an average of 10 jobs, and franchising in general is a reliable engine for economic growth.”
- Among franchise segments, the report predicts strongest economic output increases from personal services (6.2 percent increase) and retail products and services (6.1 percent), and business services the highest in projected job growth at 3.6 percent. “Business-to-business franchises are doing very well as businesses adopt leaner, more cost-effective operations and outsource some of their internal services,” Bailey says.
- If anything is holding the industry back from truly outstanding growth, it’s lack of access to credit. The report shows that more than 80 percent of franchisors and more than half of franchisees say limited access to credit continues to impair their ability to expand. “At FranNet, we’ve been advocating hard for banks to loosen credit restrictions to give entrepreneurs a chance to create new businesses and boost the economy at the same time,” Bailey says. “We match clients to the franchise businesses that fit their interests and goals, so they have excellent chances to succeed if they only had access to capital.”
For nearly 25 years, FranNet, based in Louisville, Ky., has been one of North America’s leaders in matching franchisees with franchise companies. FranNet consultants use a specific profiling and consultative process to determine a business model unique to each client’s goals, skill sets and interests, and have matched thousands of happy entrepreneurs to rewarding small business opportunities.
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