For immediate release
Contact: Alisa Harrison
202‐628‐8000
aharrison@franchsie.org
www.twitter.com/IFADC
 
 

FRANCHISE BUSINESSES TO SEE SLOW GROWTH IN 2010

Industry Forecast Predicts Increases in Jobs, Economic Growth and Number of Establishments


WASHINGTON, D.C., Dec. 16, 2009— The 2010 economic outlook for the nation’s franchise businesses
forecasts a slow recovery with marginal increases in the number of jobs, economic output and the
number of establishments, but the continuing credit crunch will limit the amount of growth that franchise
businesses have seen relative to prior recoveries.
The Franchise Business Economic Outlook for 2010, prepared by PricewaterhouseCoopers LLP (PwC)
for the International Franchise Association’s Educational Foundation, forecasts that the number of
business-format franchise establishments will increase in 2010 by 2.0 percent, from 883,292 to 901,093—
a net gain of nearly 18,000 establishments. Jobs in franchise businesses are expected to grow 0.4
percent for a gain of 36,000 jobs after losing over 400,000 jobs in 2009. Overall economic output, the
gross value of goods and services produced by franchise businesses, is forecast to increase 2.8 percent
to $868.3 billion—an increase of $23.6 billion in 2010.
“The U.S. economy is expected to experience slow growth in 2010 as the nation begins to recover from
the recession. The Franchise Business Economic Outlook for 2010’s macro view of the economy
anticipates nominal gross domestic product (GDP) to grow 3.8 percent, while economy wide employment
is projected to increase 0.4 percent in 2010,” said Drew Lyon, principal in PwC's National Economics &
Statistics practice. “Our forecast is for output of all franchise business sectors to expand modestly in 2010
as the recovery takes hold.”
The report estimates that in 2009 franchise businesses reduced employment by 4.1 percent, resulting in a
loss of 409,000 jobs as declining consumer spending caused owners to reduce costs. The number of
franchise establishments in 2009 was estimated to have stayed relatively flat, declining 0.1 percent.
Output of franchise businesses was estimated to decline by 0.7 percent in 2009, for a loss of $5.7 billion.
“We are pleased that the 2010 outlook for franchise businesses is projected to be more positive than
2009, but access to credit remains a major hurdle to increase jobs and economic output at the levels we
have seen during past recoveries,” said IFA President & CEO Matthew Shay. “An expected $3.4 billion
shortfall in lending to franchise businesses in 2010 will result in 134,000 jobs not created and $13.9 billion
in economic output lost. We urge Congress to quickly pass bills currently on the table that would close
this lending shortfall and allow franchise businesses to operate at their full economic potential.”
The lending analysis report prepared for the IFA Educational Foundation by FRANdata and released Dec.
2 estimates that banks are expected to lend $6.7 billion to franchises in 2010 versus the $10.1 billion that
would meet 100 percent of demand. The shortfall can be attributed to banks’ conservative approach to a
weak economic outlook and uncertainty in the commercial real estate market. At 100 percent lending,
franchise business could create or maintain 305,000 jobs and $32 billion of annual economic output in
2010.
Shay said that after the recession of 2000-2001, the franchise industry created more than 140,000 new
businesses and 1.2 million new jobs over a five-year period. The February, 2008 Volume 2 of the
Economic Impact of Franchised Businesses documented that franchising grew at a faster pace than
many other sectors of the economy from 2001 to 2005, with annual output expanding by more than 9
percent annually.*

-more-

Page 1  |  Page 2  |  Page 3  |  Page 4