The outlook for franchise businesses in the United States is strong. That’s the latest news from the International Franchise Association (IFA) in their latest report on United States franchise growth in 2016.
The predicted growth isn’t exclusive to one industry. The report estimates that the upward trend seen in 2015 will continue through 2016. With no downward spiral predicted, potential and existing franchisees have reason to get excited about the year to come.
In 2015, the growth trend for franchises was 1.7%. The IFA expects the same steady uptick of growth to spill over into 2016. This is perhaps due to the relief in getting small business loans and the slight uptick in interest rates.
As franchise ownership grows, employment will increase too. Estimates show that franchises will employ approximately 3% more people in 2016.
The overall economic impact of this growth would equate to $944 billion. This is a 5.8% increase from 2015, which is one of the biggest leaps forward in the past decade.
Best Industries to Enter
There isn’t a specific industry poised to grow significantly faster or stronger than any other. Still, there are three that stand out if you look closely at the estimated growth areas.
First is the restaurant and food service industry. This industry tends to see the fastest growth year over year because everyone has to eat. The IFA expects them to see a 6.3% boost in economic output in 2016.
But consumers aren’t just going to eat out a little more in 2016. They’re also anticipated to travel more. Lodging franchises are also anticipated to see an uptick in the number of guests they welcome.
The service industry is also expected to grow in 2016. In the past, this wasn’t a hot spot for franchise ownership. Recently, that’s changed. Now, more kid-focused franchises, senior care franchises and others have opened up and are growing quickly.
No matter how healthy the reports are, there are always risks in starting a business.
In 2016, the risks are not insurmountable, but they’re still important to know. The biggest comes in the form of changing labor costs. Employing people is going to get more expensive because of the Affordable Care Act, labor regulations and overtime laws.
Another concern is the impending presidential election, which always creates a certain level of uncertainty in the economy. This could create higher interest rates for franchise owners or lead to a drop in sales out of consumer fears. Regardless, the IFA has projected continued steady growth in franchise ownership, which means people are still signing on the dotted line and going into business.
Is Now the Right Time for You?
If you have been toying with the idea of opening a franchise, or if you’re a franchise owner, this is good news. The steady growth isn’t a shocking figure. Still, it’s better than seeing a decline in consumerism. It shows that the economy is bouncing back for business owners at a reasonable rate. There isn’t a bubble getting set to pop at any time. It’s a healthy way to make a living.