A new study shows that receiving credit continues to be a challenge for aspiring franchisees.
Frandata, in conjunction with the IFA, has conducted a study on franchise financing. They have found that banks will lend about $8.4 billion to new and existing franchisees this year. That’s a big number in and of itself, but the study finds that it is actually $2 billion short of the total amount that franchisees will require this year.
Frandata claim the deficit exists because banks are still suffering from the subprime crisis. The Wall-Street Journal has profiled the survey in a recent story, and all told, the data shows how much franchising contributes to the US economy – and how much more it could if more funding avenues were made available. Frandata state that America’s 35,000 franchises will “create or maintain more than 250,800 jobs and generate $32.5 billion”. The funding shortage means the lack of “8,000 unit transactions” as well “82,000 jobs and $10.7 billion in annual economic output this year” that won’t be created.
$10.7 billion. It’s a staggering amount. Hopefully the government or some third-party can step in to fill this void that the banks have left. Because, as this study shows, all of America loses when franchising is sidelined.