2005, expanding by more than 18 strategies to deal with the economic business climate, the financial cri-
percent. downturn, such as providing direct sis/credit crunch and franchise sales
financing for franchisees. In addi- and development. A number of top
Different Effects on Franchise tion, some franchise systems may see concerns can be grouped under the
Business Sectors opportunity for growth and expan- general category of government reg-
The adverse impact of the reces- sion, especially if they offer products ulations and legislation, including
sion will have different effects on and services to meet the needs of issues such as minimum wage, man-
growth in establishments, employ- consumers during the recession. dated health care and union organiz-
ment and economic output within Franchise business leaders have ing schemes.
each franchise business sector, lowered expectations for growth in Shay stated that IFA is implement-
according to the PwC report. system-wide same-store sales, unit ing a Five-Point Economic Recovery
While most of the business lines expansion and employment in 2009. Plan that aims to leverage the
are estimated to experience reduc- • In a May survey of IFA mem- strength of franchising to stimulate
tions in the number of establish- bers, two-fifths (39.8 percent) pre- economic growth. The plan calls for
ments, the quick-service restaurant dicted significant increases in same- increasing the amount of credit avail-
and table/full service restaurant sec- store sales (an increase of 6 percent or able to franchise businesses by
tors are expected to have a small net more), while in November, less than strengthening secondary markets,
increase in units (1.5 percent and 1.3 one-fourth (24.6 percent) predicted increasing access to capital by
percent respectively). same-store sales of 6 percent or more. changes in Small Business Adminis-
The sectors that are estimated to However, business leaders have tration loan programs, reducing tax
experience the largest percentage not significantly changed their burdens and uncertainties in the tax
reductions in employment are auto- expectations for unit growth. code that restrain business invest-
motive, retail food and retail prod- • More than 85 percent of the sur- ment, making small-business health
ucts and services, each contracting vey respondents expect to see unit insurance more affordable and
employment by more than 5 percent. growth in 2009. Forty percent increasing support for veterans as
The sectors that are projected to expect significant increases of 6 per- small business owners.**
see the largest percentage reduction cent or more and 45.5 percent expect “It is critical for Main Street, Wall
in economic output are lodging (3.2 moderate increases of less than 6 per- Street and Washington to work
percent), business services (2.8 per- cent. Nearly 15 percent of those sur- together to provide the policies and
cent), and real estate (2.1 percent). veyed expect a decrease in the num- actions that will stimulate business
ber of units, 12.5 percent expect a growth, business ownership and
Franchise Business Leaders moderate decrease by less than 6 per- greater levels of innovation, produc-
“Cautiously Optimistic” cent, while less than 2 percent expect tivity and employment,” Shay said.
While the U.S. economy is expect- a significant decrease of 6 percent or “The franchising community is pre-
ed to continue to struggle in 2009, more. pared to lead the way out of this eco-
franchise business leaders remain Just over 70 percent of franchise nomic downturn.”
cautiously optimistic about the business leaders surveyed expect to
prospects for their own business. increase employment in 2009, while
The Franchise Business Leader Sur- just under 30 percent expect to
vey found that franchise executives reduce employment.
see both challenges and opportuni- • One quarter (25.7 percent) of
About The International
ties in the year ahead. survey respondents expect a moder-
Franchise Association
The International Franchise Association, the world’s
While only one-quarter (24.6 per- ate decrease in employment by less
oldest and largest organization representing fran-
cent) of the survey respondents than 6 percent, while 3 percent antic- chising, is the preeminent voice and acknowledged
believe that the economy will do bet- ipate decreasing employment by 6
leader for the industry worldwide. Approaching a
half-century of service with a growing membership
ter in 2009 than in 2008, nearly half percent or more.
of more than 1,250 franchise systems, 10,000-plus
(49.1 percent) believe that their own
franchisees and more than 500 firms that supply
businesses will do better in 2009. To Looking Ahead – Five-Point
goods and services to the industry, IFA protects,
help meet these expectations, fran- Economic Recovery Plan
enhances and promotes franchising by advancing
the values of integrity, respect, trust, commitment to
chise executives reported that they The top three issues of concern in
excellence, honesty and diversity. For more informa-
are tightening budgets, cutting over- 2009, based on Franchise Business
tion, visit the IFA Web site at www.franchise.org.
head costs and implementing other Leader Survey responses, are the
www.professionalwomanmag.com PROFESSIONAL WOMAN’S MAGAZINE 41
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