It’s been quite a year for the franchising industry. Despite the challenges we faced, including rising prices due to inflation, labor shortages, and slower than normal growth, it’s still quite a force to be reckoned with. When you consider the fact that there are approximately 800,000 franchise establishments in the U.S., employing some 8.2 million workers, it’s still a vibrant sector of the economy that has much to offer the millions of Americans who count themselves among its participants. As we approach the end of the 2022 year, FranNet wanted to share a few data points and insights that demonstrate the power and reach of the franchising industry. Basically, a look back at how the industry performed – and a look ahead at what we might expect in 2023.
Before we get to the details, we’d like to take a moment to thank each and every one of our expert franchise consultants at FranNet – as well as everyone else who continue to make us the leading consultancy in the U.S. for three decades running. We’d also like to salute all of the clients – our franchisee candidates – who placed their trust in FranNet this year. We know there were many new entrepreneurial beginnings in 2022 and we look forward to many more next year. So, here’s a bit of a retrospective and a prognostication, combined in one last blog post for the year…
2022: Looking Back…
As the year began, the U.S. was still in full recovery mode from the previous shutdowns and lockdowns caused by the global pandemic. Thankfully, the threat to public health has continued to diminish, allowing business and commerce to open up to full throttle. Some persistent problems lingered, however, not the least of which included inflationary concerns, labor shortages, and supply chain disruptions. But for the most part, franchisors closed ranks among their franchisees, rolled up their sleeves, and helped them get through the challenges. The International Franchise Association’s (IFA) annual report predicted a net gain of nearly 20,000 new franchise establishments in 2022 while providing nearly $800 billion in economic output, or roughly 3% of the national GDP. For FranNet, we noted a higher volume of client interest in 2022 – no doubt spurred on and supported by the Great Resignation, in which millions of people voluntarily gave their notice to Corporate America. We had many more entrepreneurs considering their options, but interest rate hikes and their effect on lending was a constant challenge.
2023: Looking Ahead…
Everyone would like to know where the franchising industry is headed in the new year. At the time of this writing, there’s no reason to think we can’t continue the momentum we’ve built up over the past three years. Overall, considering we got past a global pandemic and a complete disruption of business and commerce, the economy is doing fairly well. FranNet expects things to really pick up in Q2 and Q3 of 2023. The battle between rising interest rates and the Fed’s rate hikes to cool off the economy will play a central factor. Which isn’t exactly an ideal lending scenario, funding is still widely available. On the flipside, finding available labor in the franchising industry should continue to be an issue as well, as many establishments continue to report not being able to find enough workers. Then, there are the recessionary fears. If the U.S. does enter a formal recession (two consecutive quarters of negative growth), that could lead to downsizing – and a wider pool of franchise candidates. 2023 should be a year in which franchise brands refine their value propositions – making them attractive targets for candidates and lending opportunities.
One thing is for sure, franchising is a resilient industry. And we’ve done more than just overcome the challenges of the global pandemic. It wasn’t that long ago that the U.S. experienced its worst recession since the Great Depression, yet time and again the franchising industry finds a way forward to create more growth, more opportunity, and more participation. As for us, we welcome all three.
In 2023, FranNet is doubling down on commitment to our clients – educating them, creating more valuable content, sharing more engaging success stories, and providing more opportunities for entrepreneurs everywhere. Happy New Year to you and your family from all of us at FranNet!
FranNet is standing by to help you navigate your own personal entrepreneurial journey. Getting started is simple and involves setting up a no-cost, no-obligation appointment with one of our qualified FranNet representatives. Not yet sure what type of business you were meant to own? That’s fine, too – you simply need to reach out and speak with one of our qualified franchise experts today! Together, we can find a business opportunity that aligns with your lifestyle and income-oriented goals.