While growth in the franchise business opportunity category in the coming year is expected to be a little bit slower than it was in 2012, the overall franchising industry will continue to outpace growth in many other business sectors, according to a new report. Prepared for the International Franchise Association (IFA)’s Educational Foundation by IHS Global Insight, this year’s The Franchise Business Economic Outlook: 2013 forecasts relatively strong showings for the industry on a number of leading indicators, including new franchise business formation, job creation, output and overall contributions to U.S. gross domestic product (GDP).
“Franchise businesses emerged from the recession stronger due to the strength of the franchise business model and the strong support of franchisors working with franchisees to sustain profitability,” said IFA President and CEO Steve Caldeira, in a statement about the report’s findings. However, he also points out that the uncertainty perpetuated by a lack of action in our nation's capital is having an impact on the franchise industry as much as any other. “Franchise businesses are now poised to accelerate growth plans,” he said, “but industry leaders say the lack of confidence in our leaders in Washington to address the fundamental challenges facing our economy is keeping them and prospective investors on the sidelines.”
In addition to its forecast based on economic indicators for the franchise industry as a whole, the report outlines the more specific growth prospects for franchise businesses that fall into ten broad business categories, all of which are anticipated to enjoy modest growth in the coming year. They are: Automotive, Business Services, Commercial and Residential Services, Lodging, Personal Services, Quick Service Restaurants, Real Estate, Retail Food, Retail Products and Services, and Table/Full Service Restaurants.
Notable highlights from the report’s findings by these specific franchise business lines are as follows:
• Business Services and Commercial and Residential Services will rank first and second in both franchise employment growth and growth of the number of establishments in 2013.
• Real Estate will rank first in output growth and grow slightly faster than the franchise sector averages in establishments and employment.
• Quick Service Restaurants, representing the largest franchise business line, will rank third in the growth of output and will see growth rates of employment and new businesses that are near the franchise sector average.
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