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Happy New Year


Considering franchising has been through better and worse over the past few years, which way do franchisors expect the pendulum to swing this year? Straight up, apparently: A recent survey pegs their estimations of franchise unit growth in the 12 percent to 14 percent range. The survey, conducted by Franchise Recruiters Ltd., a franchise executive search firm in Chicago, indicated franchisors expect an improvement over last year's fairly impressive growth rate of 10 percent to 12 percent.

Jerry Wilkerson, president of Franchise Recruiters Ltd., attributes the optimism mostly to fresh financial opportunities. "One of the most important objectives of any franchisor is to secure good, solid financing for their franchisees' individual units," says Wilkerson. General Electric, ITT and AT&T Capital Corp. are just a few companies eager to get involved in the financial aspects of franchise development.

Franchisors' top concerns for 1996 included the shrinking labor pool and computerizing communications. Wilkerson predicts franchisors may accelerate closing down low-producing units and may try to "squeeze margins"-decreasing operating costs while increasing average unit sales.

This good news will most likely affect more than just the franchise community. "Franchising has always been a leader in the economy," says Wilkerson, who has tracked the industry for 19 years. "Now we're seeing an increase in franchising, which will probably precede an improvement in the economy."

Contact Sources

Franchise Recruiters Ltd., 3500 Innsbruck, Crete, IL 60417, (708) 757-5595.

This story appears in the February 1996 issue of Entrepreneur. Subscribe »