The International Franchise Association (IFA) today released its 2023 Franchising Economic Outlook report, showing that franchise unit and job growth continues to outpace pre-pandemic levels, delivering jobs and business ownership opportunities across the United States, despite economic uncertainty across all industries and in daily life. The report highlights the impacts of today’s unique economic challenges, which have affected system growth and led to an increase in wages, among other factors.
“Even with today’s economic headwinds, franchised businesses continue to grow, providing more good-paying jobs for their employees, and serving their local communities,” said IFA President and CEO Matt Haller. “After an historic year of growth during the post-pandemic recovery, the size of the franchise economy in 2023 will exceed pre-pandemic levels – demonstrating the power of the business model for prospective business owners when franchisors and franchisees work together.”
Key highlights from the report include:
- The overall number of franchise establishments will increase by almost 15,000 units in 2023, or 1.9%, to 805,000 units in the U.S.
- Franchising will add approximately 254,000 jobs in 2023. Growing at 3.0%, total franchise employment is forecasted to reach 8.7 million.
- The total output of franchised businesses — the measure of total economic activity in nominal dollars — will increase by 4.2% to $860.1 billion in 2023, up from $825.4 billion in 2022.
- Franchises’ GDP share of the overall economy will remain stable at 3%. Compared with 2022, franchises’ GDP — the monetary value of all the finished goods and services produced within U.S. borders — will grow at a slightly slower pace of 4.2% to $521.3 billion.
- Service-based industries and quick-service restaurants will witness higher growth than other industries.
On the state and regional level, the report shows that states have experienced different rates of franchise business growth due to disparities in business climates, migration trends, the labor market, and major industry investments. On the state level, it is predicted that:
- States in the Southeast and Southwest will experience the fastest franchise business growth in 2023.
- The top 10 states for franchise growth in 2023 are projected to be: Texas, Illinois, Florida, Georgia, Tennessee, North Carolina, South Carolina, Arizona, Colorado, and Indiana.
- The Southeast region, which has the largest franchise concentration in the U.S., will have an estimated 234,079 total establishments by 2023, employing 2.5 million workers and contributing $250 billion in output to the U.S. economy.
For a state-by-state analysis or to download your state’s data, go here.
“In spite of all the challenges, the cooperative nature of franchise businesses helped better insulate franchise owners from macro-economic uncertainty,” said Darrell Johnson, CEO of FRANdata. “Our team produced insight-driven forecasts leveraging our understanding of the franchise market and industry forces.”
Conducted by FRANdata, the 2023 Franchising Economic Outlook is IFA’s annual study detailing the franchise sector’s performance for the past year and projected economic outlook for the year ahead, as well as an in-depth state outlook for all 50 states and Washington, D.C.
According to Oxford Economics, franchises pay nearly 3 percent higher wages than similar independent companies and offer greater benefits and more generous leave. Franchising creates unparalleled entrepreneurial opportunities for underrepresented communities, and nearly one-third of franchise business owners say they wouldn’t own a business without franchising.
Source: Franchise.org
