Business Owners Are Optimistic About Franchise Growth
A survey undertaken by the International Franchise Association of 2,000 franchise leaders shows the bullishness of franchise owners. More than half of the respondents say their current business conditions are good. This is up compared to 38% in 2011. “Franchising remains a bright light in a still-struggling economy,” says IFA chief Stephen Caldeira. Katherine Ellison of CNBC says this bright outlook could explain the unexpected growth in franchise output. The IHS Global Insight sees a rise in franchise employment and a 5.3% total franchise output from an earlier 5% projection. There is also more optimism with regards to access to credit, says the HIS Global Insight survey. Joel Libaya, author of “Become a Franchise Owner,” speculates, “Maybe it’s just that people are tired of being in the dumps. They’re tired of waiting on the sidelines for something to happen, so they’re making something happen by themselves.”
An IFA report released last week of a survey of 2,000 franchise leaders found that 56 percent of respondents said current business conditions are good — up from 38 percent in 2011. Moreover, 54 percent believe those conditions will improve within a year, compared to 33 percent in 2011.
The new optimism may help explain some unexpected growth in franchise output. The IHS Global Insight forecasting firm last week adjusted its 2011 predictions to account for a few improvements: Franchise employment is expected to increase to 2.2 percent, with 177,000 new jobs, up slightly from the original forecast of 2.1 percent in December, while franchises’ total output is now projected to rise by 5.3 percent, to $39 billion, up from an earlier projection of 5 percent.
One indicator was adjusted downward, however. The new forecast projects that the number of franchise establishments will increase by just 1.7 percent, with 12,454 more units, reduced slightly from the December forecast of 1.9 percent.
But for some sectors, franchises are growing significantly faster than the industry average of 5.3 percent. Averaging closer to 6.1 percent growth are companies in commercial and residential services, such as Jani-King janitorial services; ServiceMaster and Mr. Rooter, for home maintenance; personal services, including Sport Clips, Supercuts and Great Clips; and home health care, such as BrightStar and Comfort Keepers.
Franchise leaders are even revealing improved hopes when it comes to access to credit, according to the IHS Global Insight survey. Nearly 38 percent report some improvement in their ability to get loans over the past six months, compared to 25 percent in 2011.
“Maybe it’s just that people are tired of being in the dumps,” Libava speculates. “They’re tired of waiting on the sidelines for something to happen, so they’re making something happen by themselves.” …
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