The economic impact of retailers is undeniable, according to a 2015 study by PricewaterhouseCoopers, LLP. Through retail, 42 million jobs are supported, $1.6 trillion are paid out in labor wages, and the GDP benefits by $2.6 trillion annually.
There are approximately 29 million jobs in retail and 11.5 million of those are provided by small businesses with less than 50 employees. These are impressive numbers that show the impact franchise owners have on their local economies.
Thinking about buying a franchise? Now might be the right time. Here’s what we found in our 2015 franchise report to help you decide if buying a franchise is right for you.
Are Franchises Retail?
It’s safe to say that most franchises fall under the category of “retail.” Retail is defined by the United States government as the following:
This wasn’t always the case. In the past, the retail industry was defined by a different standard known as the Standard Industrial Classification (SIC) system. This system did not include most food and beverage locations. Now, restaurant franchises are contributing positively to employment in the United States and are being categorized as retail businesses.
An Optimistic Outlook
The retail industry is predicted to continue growing. Much of this is due to the improved consumer attitude toward spending.
In 2015, consumers attitudes towards spending vs. saving were high. The Consumer Sentiment Index ranked these attitudes as higher than 90 on a 100 point scale. This was an increase from 2013 when the average was around 79 and 2014 when the average was 84.
Is Now the Time to Buy a Franchise?
If the numbers are any indicator, the answer is yes. Consumers are spending more and the retail industry is growing with trillions of dollars being contributed to the local economy each year.
But which one should you buy?
The choice is yours. Finding the right franchise is imperative to your success. Here are a few factors to consider when deciding on which franchise you want to open.
What is the economic climate for the franchise in your area?
Location matters in more than just residential real estate. It matters to your franchise real estate too. Where you open your business will have a profound impact on your success.
Look at the area where you plan to open your franchise.
- What does the competition look like?
- Is there too much or too little competition?
- Is there a market for what you’re trying to sell?
Although a franchise might be wildly successful in another city (or even another part of town) it’s not always going to thrive where you’re located. Get familiar with the climate where you plan to operate to limit your search of franchises.
Will you love marketing your franchise?
If you don’t love marketing your franchise, you won’t succeed. It’s that simple.
You need to be passionate about the business you buy. Talking to other franchise owners of the same franchise will help you know what to expect in terms of what corporate provides you and what you must do on your own. Some franchisees appreciate having flexibility in their marketing while others like headquarters to guide the way. The choice is yours.
How much does it cost to open?
Some franchises require a large initial investment and the checking off of a few financial must-dos. Others, not as much. Still some, such as Ace Hardware, have a wildly large range making it hard to know what you need to succeed.
Determine how much you need to spend to get your franchise off the ground. You might be surprised once you start crunching the numbers. This can also help you narrow your search.
2015 was a great year for consumer spending and the economy in the retail industry. By giving the economic climate in your area, your passion and the costs consideration, you’ll find the best retail store to buy for you.