As the U.S. economy starts to recover, franchised small businesses continue to strugle due to low consumer confidence, high unemployment rates and tight credit markets. The 2010 Franchise Business Economic Outlook, prepared by PricewaterhouseCoopers LLP (PwC), forecasts a slow recovery with marginal increases in the number of establishments, employemnt and economic output, the gross value of good sand services a business produces.
Establishments - From 2001 to 2005, the number of business format franchise establishments increased on average 5.6 percent per year. PwC estimates that the growth in the number of establishments from 2008 to 2009 was virtually flat. The forecast for 2010 is 2.0 percent, for a net increase in number of establishments of 17,801 units.
Jobs - From 2001 to 2005, business format franchises experienced an average annual increase in employment of 3.7 percent. In 2009, employment decreased 4.1 percent for a net loss of 409,000 jobs. In 2010, PwC predicts employment will increase 0.4 percent for a net increase of 36,000 jobs.
Output - From 2001 to 2005, business format franchises experienced an annual average growth of 9.7 percent in economic output. Growth slowed in 2007/2008 to a 2.8 percent increase in economic output. In 2009, economic output declined 0.7 percent for a net loss of $5.7 billion. In 2010, PwC estimates that output will increase 2.8 percent for a net gain of $23.6 billion.
