Report: Franchise Establishments to Post Biggest Growth Since the Recession
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The franchise world appears to have hit its post-recession stride.
The number of franchise establishments in the U.S. is projected to grow 1.7 percent in 2014. This would be the greatest year-over-year increase since before 2008, according to the latest Franchise Business Economic Outlook.
The report, released annually by the International Franchise Association, also forecasts a strong output for the franchising industry: $839 billion in 2014, an increase of 4.7 percent from 2013.
"Throughout the recession and tepid, uneven economic recovery, the strength and entrepreneurship of the franchise sector has been a consistent job creator for the U.S. economy," said IFA president & CEO Steve Caldeira in a statement.
The report predicts that the broader economy will grow stronger in 2014, with real GDP growth accelerating to 2.7 percent. With these changes, the IFA forecasts that growth in the franchise sector will continue to outpace the broader economy.
Business services, commercial and residential services and quick service restaurants are expected to be major drivers of job creation in 2014. Employment in the franchising industry is predicted to grow 2.3 percent, matching the pace of growth in the last two years. Thirty-eight percent of these new jobs are forecasted to be in quick service restaurants, which are projected to create 75,596 new jobs.
"I see healthy alternatives picking up more and more [in quick service restaurants]," says Mike Weinberger, CEO of smoothie chain Maui Wowi, which was featured on Entrepreneur's 2014 Franchise 500 list. Weinberger also cites value menus, organic and home and mobile based restaurants as areas of growth for 2014.
Seventy-six percent of franchisors expect business opportunities to improve in 2014 compared to 2013, according to the report.
"I believe that the franchise industry has a tremendous amount of promise because of the amazing amount of support," says Eric Casaburi, CEO of Retro Fitness, another company on Entrepreneur's Franchise 500 list. Casaburi predicts an increased attention to the uses of technology in industries that have previously ignored the potential of tech.
"After the economy took a hit people realized they wanted to be masters of their own destiny," says Weinberger. "Now, growth is on the horizon."
Related: The Top 10 Franchises of 2014