Buying a Franchise, Franchise Outlook

Franchise Jobs on the Rise

The ADP National Franchise Report for June 2015 says that 28,800 new jobs have been created by franchise businesses in June of 2015. Restaurants and automotive businesses showed the largest numbers of new jobs, but the infographic below shows that many segments of the franchise industry added new jobs in June.
 U.S. Added 28,800 Franchise Jobs in June, According to ADP National Franchise Report

This translates to a growth rate of 3.4% in employment across all industries, compared with 2.7% growth among small businesses in general. 3.4% is also the level of growth forecast for the GDP of the U.S. overall through the year 2015, but the franchise sector is anticipated to grow by 5.2%.

People in the franchise sector are not surprised by these positive numbers. Franchise businesses now dominate a number of sectors in the U.S. economy:

  • More than half of the fast-service restaurants in the U.S. are franchise businesses.
  • Franchise businesses are currently one of the fastest-growing exports of the U.S., according to the House Committee on Small Business.
  • Small businesses accounted for half of all U.S. job growth in the past year, and franchises were particularly strong in creating this growth.

The International Franchise Association Educational Foundation predicted in January 2014 that the strongest growth would be in business services, commercial and residential services, and quick-service restaurants.

The IFA continues to feel some concern about the National Labor Relations Board’s stance on franchisors as “joint employers” with franchisees. Their most recent report introduces a note of caution about their predictions because of the ongoing discussion around this issue.

However, their June report is actually more optimistic than the January report, with growth predictions revised upward for many industries.

Which franchise industries are expected to see the most growth?

  • Retail is the winner in projected employment growth overall as consumer spending rises in the holiday shopping season.
  • Quick service (fast food) restaurants are #2 in projected employment growth for 2015.
  • Lodging is expected to be third place in job growth.

The general drop in new housing starts and home sales causes the IFA to predict lower growth in real estate and related services. They also express some caution about residential services and personal services, both of which are expected to grow, but at a slower rate.

All in all, franchise businesses are expected to produce $496 billion of the U.S. GDP.

When you think about investing in a franchise business, you should be encouraged by the general economic strength of franchise businesses in the U.S. economy. However, many franchisees also take satisfaction in the knowledge that they have the power to provide jobs in their communities.

The nation’s overall job outlook has been good, but a recent report from the Wall Street Journal pointed out that growth has largely been in skilled jobs, not unskilled jobs. Entry level jobs are not growing at the same pace as jobs that require more training, and U.S. companies in general have not shown themselves to be willing to invest in worker training. More jobs in fast food restaurants or retail franchises can provide the entry-level jobs that provide a stepping stone toward better jobs in the future.

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