Industry News
The Entrepreneur’s Source Reviews 2015’s Projected Franchise Growth
The Entrepreneur’s Source Reviews 2015’s Projected Franchise Growth
Good news for the franchising industry continues for the fifth consecutive year, as International Franchise Association’s (IFA) Franchise Business Economic Outlook report for 2015 revealed that the franchise industry is predicted to grow and create jobs faster than the rest of the economy.
“Franchising is an American success story. Independently-owned and operated local franchise businesses are growing faster, creating more jobs at a quicker pace and producing higher sales growth than other businesses. Franchising is a vital engine of economic expansion in the United States and 2015 looks to be another strong year for franchise businesses,” said IFA President & CEO Steve Caldeira.
The growth in the number of franchise establishments, franchise output and franchise brands’ contributions to U.S. gross domestic product are predicted to exceed 2014’s growth. Below, The Entrepreneur’s Source reviews some of the key findings that the report outlines:
Key Findings from the Franchise Business Economic Outlook Report:
- Franchises are predicted to add 247,000 new jobs this year, a 2.9 percent increase to 8.8 million direct jobs, over last year. That is on top of the 235,000 franchise jobs that were added in 2014.
- The number of franchise establishments is expected to grow this year by 12,111, or 1.6 percent, to 781,794.
- Economic output from franchise businesses is estimated to increase by 5.4 percent over last year to $889 billion.
- The gross domestic product of the franchise sector is projected to rise by 5.1 percent this year, which is faster than the 4.9 percent GDP increase forecasted for the economy as a whole.
- The franchise sector will contribute about 3 percent of the U.S. GDP in 2015.
NLRB Ruling Still Potential Threat for Franchise Brands
Despite the promising growth potential of the franchising industry throughout 2015, there is one major area of concern for franchise brands: The National Labor Relations Board ruling. In fact, 97 percent of respondents to the IFA’s Franchise Business Leader Survey reported that they believe that the joint-employer ruling may have a negative impact on their franchise.
“Last month, the NLRB moved to upend decades of law and practice by issuing a complaint against McDonald’s saying that it should be considered a ‘joint employer’ with its franchisees. The entire business model of franchising is endangered by this ill-conceived complaint,” he said. “Hundreds of thousands of franchisees must now operate not knowing whether they should believe what their contracts clearly state, that they are in charge of their own work place practices, including setting wages and hours, or that the corporations from which they license their trademarks are also responsible for those things. The ruling could put the brakes on what looks like a banner year of accelerated growth and job creation in the franchise sector.”
Despite the impending fate of this decision, prospective franchisees are encouraged to take advantage of franchise brand’s growth potential in 2015. For aspiring entrepreneurs who are interested in investing in a franchise in 2015 but aren’t sure where to start, contact an alternative career coach at The Entrepreneur’s Source today.