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.

 

This is one of the most common phrases I hear from my clients.  They know they want to be in business for themselves, but they don't know where to begin.  There are many different paths to follow when you decide you want to "be your own boss."  You can start a new business, purchase an existing independent business, purchase a new franchise, or purchase an existing franchise.  With these very important decisions...where do you begin?  This is where the services of a franchise consultant / business broker become invaluable.  I can meet with you and we can discuss all of your options.  I will show you new and existing franchises and businesses that might be of interest to you, show you how to research the different options and ultimately make an informed decision, whether its yes or no.

So, you've decided you want to be your own boss.  Why would you want to buy a franchise?

A franchise is an excellent way to be in business for yourself, but not by yourself!  You can be your own boss and still have the support from the Franchisor.

You can find out about the franchise before you buy it - you can talk with franchise executives, speak with current franchisees, etc.

You will receive ongoing support from the franchisor and other franchisees.

You will have national buying power (something very hard to achieve as an independent business).

You will have the benefit of a name brand.

The franchise already has a proven system - you just have to follow it!

The economic impact of franchising goes beyond activities inside franchised businesses, because their purchases of products and services and the personal purchases of their owners and workers contribute to the growth of non-franchised businesses. As a result of these spillover effects, the total impact of franchising was to provide 21 million jobs (15.3% of all private-sector jobs) and $660.9 billion of payroll (12.5% of all private-sector payroll) in 2005. Output produced because of franchised businesses grew from $1.5 trillion in 2001 to more than $2.3 trillion in 2005; an average growth of 10.9% per year. In 2005, output produced because of franchised businesses accounted for 11.4% of all private-sector output.

This information was taken from the Special Report: Economic Impact of Franchising, Vol. 2 article in the March 2008 edition of Franchising World.