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This Year's Franchise Business Economic Outlook

The IFA released its forecast for the year of franchising that lies ahead yesterday. A few words catch the eye: 'challenging' and ‘cautiously optimistic’.

The first-ever Franchise Business Economic Outlook was conducted by PriceWaterhouseCoopers. The survey, predictably perhaps - considering the economic challenges, of the last year - forsees that the franchising industry, as a whole, will contract over the course of the year. It says the number of franchise establishments will drop from 865,000 to 855,000. It also predicts that 207,000 jobs in franchising will be lost during the year and that the value of goods and services sold by franchising industry will decline by about four billion dollars.

So where, you ask, is the silver lining? Recent surveys have shown that franchisors remain confident that franchising will rebound quickly after credit markets stabilize. Part of this optimism comes from past experience: franchisors have emerged from the few recessions stronger than ever. Just look at the period the followed 9/11. The economic decline that followed the attacks on the World Trade Center triggered a growth spurt in the franchising industry, so much so that the industry grew by over 18% over the next four years.

Entrepreneurs looking for investment opportunities will be heartened that there are signs of growth in quick-service restaurants and full service-table restaurants (up 1.5% and 1.3% respectively). Meanwhile, the industries that are experiencing the least amount of contraction are lodging, business services and real estate franchises.

There is a lot of essential information in this study for people preparing for the year in franchising. Explore all of the information here.

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