Franchises Growth will Exceed non-Franchise Businesses Growth

FRANCHISE BUSINESSES TO CONTINUE GROWTH TREND IN 2016, OUTPACING ECONOMY-WIDE PACE*

WASHINGTON, Jan. 20—Franchise small businesses will once again grow at rates that exceed non-franchise business growth in 2016, according to the Franchise Business Outlook: 2016 released today by the International Franchise Association.

“We are forecasting that for the sixth consecutive year, franchise businesses will grow at rates that exceed the economy-wide growth of industries where franchises are concentrated,” said IFA President & CEO Robert Cresanti. “Franchise businesses are showing tremendous capability to provide new jobs for working families and new businesses for first-time business owners across all sectors in local communities, despite the fact that franchisees are facing many new regulatory threats at all levels of government.”

Key findings from the 2016 Economic Outlook prepared for the Franchise Education and Research Foundation by IHS Economics Include:

  • Franchise businesses will have a 3.1 percent growth in jobs, adding 278,000 direct jobs to the economy this year for a total of 9.1 million.
  • For the past five years, the average annual job growth in the franchise sector was 2.6 percent, nearly 20 percent higher than all businesses economy-wide. Over the last five years the franchising sector has added nearly 1 million jobs to the economy.
  • The number of establishments will grow this year by 13,359, or 1.7 percent, to 795,932.
  • The IHS Economics forecast of output growth in nominal dollars for franchise businesses will increase this year by $52 billion, 5.8 percent, to $994 billion.
  • The gross domestic product (GDP) of the franchise sector is projected to rise 5.6 percent this year to $552 billion, adding $29 billion in GDP to the U.S. economy. The franchise sector will contribute approximately 3 percent of U.S. GDP in nominal dollars
  • Business format franchise businesses cross over 300 business lines that can be categorized into 10 general areas: Automotive, Business Services, Commercial & Residential Services, Lodging, Personal Services, Quick Service Restaurants, Real Estate, Retail Food, Retail Products & Services and Table/Full Service Restaurants.
  • While the 2016 Economic Outlook shows that all 10 areas will see growth this year, the lodging sector leads the way with 6.6 percent output growth. As overall consumer spending maintains a 3 percent growth pace in 2016, the outlook for the retail products & services, quick service and table service restaurant business lines and business services will continue to be among the growth leaders in 2016.

“With continued job gains, consumer spending will accelerate creating another strong year of growth for franchise businesses,” said IHS Economics Senior Economist Jim Gillula. …“ *According to the IFA published January 20, 2016