Buying a Franchise

Franchises Add 52,500 Jobs in October

American franchise businesses brought 52,500 new jobs into the economy in October, according to the ADP Research Institute. Moody’s Analytics assists with this monthly report.

This is the highest one-month total since ADP began tracking these numbers.

Restaurants represented just short of 75% of the growth, with 39,190 new jobs. Franchise restaurants employ 4.4 million people, which is more than half of the 8.7 million people currently employed at franchises. Even though the large numbers make it predictable that restaurants should be at the top of the growth in sheer numbers of jobs, it is also represents a high .9% increase for the industry.

Restaurants in general, including both franchise and independent restaurants, were responsible for 30% of all the job growth in the U.S. in October.

Restaurants have been a growth industry for the past two years, and the continued growth suggests that recent legal concerns are not causing the problems many people feared. Some observers, in the wake of the National Labor Relation Board’s rulings on joint employer cases brought against McDonald’s and the increases in minimum wage which have affected franchisees, had predicted that the franchise model for restaurants would be damaged. This does not seem to be the case.

Auto parts and dealers achieved 10,260 new jobs, close to 20% of the increase in franchise jobs, while another 2% of the growth came from auto repair and service stations. Taken together, the two auto-related segments account for just about 22% of the reported job growth.

These two industries accounted for nearly 97% of all the growth in franchise business employment numbers. However, most franchise sectors showed some growth, usually single digits and in many cases about 1%.

Other franchise industries which showed growth in October include

  • Personal Services
  • Food Retailers
  • Accommodations
  • Personal Care
  • Retailers
  • Real Estate
  • Professional Services
  • Building and Construction
  • Education

Only a few franchise sectors failed to show growth in October.

The U.S. Bureau of Labor Statistics confirmed the ADP’s numbers, and  weighed in with some thoughts about why the robust job growth might have taken place — and why it took place in the industries in which it did.

Consumer confidence is up and the American shopper seems ready to spend, so expenses that might otherwise be put off — including auto maintenance and restaurant meals — may be getting back onto household budgets.

Since growth was not seen in manufacturing and energy jobs,two industries which have been having trouble finding qualified workers, some experts theorize that the Skills Gap is part of the reason those industries did not see growth in jobs. The “Skills Gap” refers to the difficulty employers have in finding American workers with the math, science, and engineering background to work in modern manufacturing and in tech jobs. These areas may need more workers, but American students don’t pursue those majors.

The falling price of oil is another factor commentators are looking to for the low showing of some industries, as well as the strong dollar.

For small businesses, which were the powerhouse of Octobers high job growth rate, these factors can also be advantages.

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