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Franchise Employment Trends

During this week’s Proven Match blog edition, we’re going to take a look at some industry statistics—specifically, what current franchise employment trends we’re seeing. Franchising continues to be a powerful economic leader when it comes to employment, especially in the small business segment of overall growth.

Some excellent—and more importantly—recent statistics are out in a published report from the International Franchise Association’s Franchise Education and Research Foundation. Entitled, The Economic Impact of Franchised Businesses, Vol. IV, Sept. 2016, it takes an in-depth look at the overall impact of franchising on the U.S. economy. And it matches up quite well with what was predicted for 2016. Here are some of the key findings and takeaways:

- The combined activity of all franchised businesses in the U.S. is a powerful economic driver, resulting in over 13 million jobs and $1.6 trillion in economic output, which represents approximately 5.8 percent of the Gross Domestic Product (GDP).

- Not counting domesticated farm-related work, franchises produce between six and 10 percent of jobs in all 50 U.S. states.

- What’s the breakdown by franchise category when it comes to employment? Quick service restaurants (QSR) lead the pack, represented by 25 percent of all franchise establishments, and thereby producing 45 percent of all franchise jobs in the industry.

- As an industry, franchising is a powerful employer, beating out other categories nationwide such as transportation, real estate, and both durable and non-durable goods manufacturing.

So now let’s review this information with what was predicted back in January of this year by the International Franchise Association. At that time, they issued their annual report of industry predictions, the Franchise Business Outlook: 2016. Here were their prognostications:

- Over three percent growth in the franchising sector and the addition of over 275,000 jobs created.

- Total new franchise establishments were predicted to top 13,000—an almost two percent increase over 2015 numbers.

- Output growth (in dollars) for franchised businesses was predicted to increase to levels approaching over $50 billion.

- A franchise gross domestic product (GDP) increase of over five percent across the board.

As you can see, the news was good back in January and the outlook remains optimistic as we approach the close of 2016. However, that’s not to say that there aren’t industry concerns which could put a crimp in the power of franchise employment and its business model.

Many franchisors and brand owners remain concerned about the encroachment of additional government regulations. One in particular was the National Labor Relations Board (NLRB) recent decision to classify franchisors and franchisees as “joint employers.” What effects this ruling will have for the long-term business model of franchising remains to be seen, but it’s definitely worth watching for indications of impact on the micro-employment levels within the industry.

By and large, 2016 has been a good year for the franchising industry as a whole. As we get closer to December, the predictions will ramp up once again and we’ll be ready to disseminate any forecasts for you in the coming weeks.

In order to get your organization on par in this flourishing industry, you’ll want to know which existing and potential franchisees best fit your business concept. Proven Match is the proven solution in determining those factors. Through our proven behavioral assessment techniques, predictive analysis becomes predictive success for your franchise concept. If you’re ready to show your leadership by getting started, give us a call and we’ll put you on the path to a more productive year in 2016.

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