BUSINESS & FRANCHISING
Franchise Businesses Prepare for
Economic Challenges
Industry Remains Cautiously
Optimistic
The nation’s franchise businesses
that employ millions of American
workers and generate hundreds of
billions of dollars of economic output
are preparing for economic chal-
lenges in the New Year.
The industry is expected to experi-
ence a decline in the number of estab-
lishments, jobs and economic output
in 2009, according to a report by the
International Franchise Association’s
Educational Foundation. Despite
this outlook, franchise business lead-
ers remain cautiously optimistic
about the prospects for their own
businesses, the report found.
The Franchise Business Economic ments. Another factor is the sharp emerged from previous recessions
Outlook for 2009, prepared by Price- drop in consumer spending, which even stronger. As credit markets sta-
waterhouseCoopers LLP, forecasts according to the PwC report, is bilize, they see many opportunities
that the number of business format expected to continue well into 2009 for growth
franchise establishments will decline with adverse impacts on many sec- “Franchising industry veterans
in 2009 by 1.2 percent, from nearly tors of the economy. know that the current conditions,
865,000 to less than 855,000—a net “The U.S. economy is in the midst although extremely challenging, are
loss of some 10,000 establishments. of the most severe recession since at temporary,” said Matthew Shay, IFA
Jobs in franchise businesses are least the early 1980s, with adverse president and CEO. “Our survey
expected to fall by 2.1 percent, for a impacts on a broad range of sectors shows that franchise business leaders
loss of 207,000 jobs. Overall eco- of the economy, including franchise have confidence in the entrepreneur-
nomic output, the gross value of businesses,” said Drew Lyon, partner ial spirit of their franchisees and the
goods and services produced by in PwC’s National Economics & Sta- fundamentals of the franchise busi-
franchise businesses, will likely tistics practice. “The report’s macro ness model as factors that will help
decline by 0.5 percent—a loss of $4.2 view of the economy anticipates a them weather the economic storm.”
billion in 2009. continuation of the sharp downturn Franchising has withstood such
These estimated declines can be well into 2009 with a slow recovery.” turmoil before, Shay said. After the
attributed, in part, to the unfolding Overall, nominal gross domestic recession of 2000-2001, and the tragic
credit crisis. The report refers to a product (GDP) is expected to decline events of September 11, 2001, the
preliminary study by FRANdata, a by 0.7 percent while employment is industry created more than 140,000
firm that specializes in franchise projected to fall by 1.9 percent in new businesses and 1.2 million new
industry data. The FRANdata study 2009, according to the report. jobs over a five-year period. The
predicts borrowing by franchises will Despite these predictions, fran- February, 2008 Volume 2 of the Eco-
fall by approximately 27 percent in chising veterans remain optimistic. nomic Impact of Franchised Busi-
2009 compared to the previous year, Responding to an IFA Franchise nesses documented that franchising
limiting the expansion of existing Business Leader Survey in Novem- grew at a faster pace than many other
franchises as well as new establish- ber, many noted that the industry has sectors of the economy from 2001 to
40 PROFESSIONAL WOMAN’S MAGAZINE
www.professionalwomanmag.com
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