Franchise businesses continue to power up the U.S. economy and two just-released reports explain why.
FRANdata’s The Small Business Lending Matrix & Analysis finds that the industry’s perennial lending shortfall – the difference between projected loan demand and loan supply – will likely be cut in half this year, positioning the franchise industry for robust growth. IHS Global Insight’s Franchise Business Outlook reports that franchise industry growth has outperformed the overall economy for the past six years. Both reports are prepared for the International Franchise Association Educational Foundation.
“With seven out of 10 franchise business lines adding jobs faster than the private sector at-large, the franchise business model continues to provide jobs and entrepreneurship opportunities for workers and entrepreneurs in sectors as diverse as hotels, auto, business and personal services and restaurants,” said IFA Pres. & CEO Steve Caldeira, CFE. “One reason for this success is that credit is steadily becoming more available for franchise expansion.”
Here are a few key findings:
- Franchise demand from both new and existing franchisees is expected to exceed 73,800 unit transactions in 2014. This represents a 12.4 percent increase in demand over 2013 and an 18.8 percent increase over 2012. (FRANdata)
- To satisfy this demand, franchise businesses will require $29.4 billion in lending. Of this demand, banks will make $28.1 billion available. These funds will provide financing for 70,500 unit transactions, which will create or maintain more than 1 million jobs and support $138 billion of annualized economic output. (FRANdata)
- Franchise employment is expected to increase by 2.6 percent in 2014, faster than the 2.5 percent growth in 2013 and outpacing projected total employment growth in the United States by 0.8 percentage points. (IHS Global Insight)
Franchises are expected to add 221,000 new jobs in 2014. Moreover, with 2.6 percent employment growth, franchises are adding jobs faster in 2014 than 2013 and outpacing projected total employment growth in the United States by 0.8 percentage points. (IHS Global Insight).