From 2010 to 2015 franchising has seen nothing but strong growth. Consider these two statistics:
– The economic production of franchise establishments has increased from $699 billion to $892 million.
– The number of franchise establishments has increased from 740,098 in 2010 to 795,932 in 2015.
The International Franchising Association (IFA) projects continuing growth in its Franchise Business Economic Outlook for 2016 prepared by IHS Economics. It’s expected that the number of franchise establishments will grow by 1.7% this year:
– Franchise output will increase by 5.0%.
– Employment by franchises will continue to remain strong with 3.1% growth.
– The six-year period from 2011 to 2016 (projected) realized a 2.7% growth which is 0.5% higher than all businesses economy-wide.
A driver of this expansion will be the expectation that business spending will grow in 2016, boosting franchises that provide business services. In fact, business services franchises are projected to rank first in the growth in establishments and are tied for second in employment growth with a 3.3% gain.
Fast food and table service restaurants are also expected to expand nicely throughout 2016.
What this Means to a Prospective Franchisee
Franchising comes with built in advantages most prominent of which is that most mistakes have been bled out of the enterprise for prospective franchise owners. The business system a franchisee works with offers proven business concepts. This means in each of the main business disciplines like finance, marketing, sales and operations all of the processes and procedures have been refined to reflect what exactly is needed to make a successful business.
For example, in marketing, a franchisor will be able to explain to its franchisee what marketing works best (the internet, trade journals, industry shows, etc.) for the business. If the franchisee focuses efforts in those areas, odds are, they will pay off if executed well.
Another built in advantage is if franchisees struggle, they can turn to a support network that includes others that have faced and conquered the same issues. The accelerated learning curve very much works in favor of success for all franchisees.
The fact that the franchise industry as a whole is performing well for the US economy is a positive factor for the prospective franchisee to consider during the due diligence process. Simply put, it means the franchising concept works and is a viable way to make a living and in the process, possibly help others make a living as well.