Are you wondering if buying a franchise is a good decision in the current economy? If so, which part of the industry shows the most promise?
Despite economic uncertainty, the franchise system has proven to be a business model that is uniquely capable of withstanding economic pressure. A recent report by the International Franchise Association (IFA), states that
“…franchising serves as an economic catalyst in states and communities, giving prospective entrepreneurs a chance to own and operate their own business while adding jobs across the economic spectrum and benefiting from established systems, a well-known brand, and insights from more experienced franchisees.”
Even in the midst of an economic decline featuring high inflation, labor shortages, and supply chain issues, the IFA predicts franchise “Establishment Growth” and “Employment Growth” in 2023 as they are forecasted to grow higher than pre-pandemic norms. In fact, the IFA also projects an increase in overall growth in the franchise industry in 2023.
Learn more by reading The Future of Franchising: What to Expect in 2023.
Which Franchise Industries Will Grow the Most in 2023?
The IFA reports that service-based industries and Quick Service Restaurants (QSRs), the official term for fast food restaurants, are forecasted to experience the most growth in 2023. More precisely, they are expected to see a 2.5% expansion. Despite the impact that supply constraints, labor shortages, and high inflation have had on QSRs, the industry is still projected “to account for 45.3% of all franchise employment, followed by retail food, products, and services, which will employ 13% of the workforce.”
Why Have These Industries Continued to Grow?
The economy has not been particularly business-friendly, so it might seem odd that these industries have fared well the last few years and are projected to continue growing in the coming years. However, the brands in these industries are experiencing success because they have innovated and adapted according to the preferences and needs of their customers. As a result, they will continue to attract more consumers as well as interested franchisees.
Specific Industries Expected to Grow
The IFA report details the following statistics representing its forecasts for output growth:
- Personal services – 6.7%
- Lodging sector – 6.6%
- QSRs – 5.1%
- Business services – 3.8%
Where in the United States Will Franchising Grow the Most in 2023?
Although we’re experiencing an economic downturn, franchising will continue to move upwards and positively impact the economy on a national, regional and state level. The following states are projected to be the top 10 growth markets for franchises in 2023:
- North Carolina
- South Carolina
Out of all the states, Texas experienced the most growth in 2022 and is expected to continue leading the other states in terms of growth in 2023. A few factors contributing to Texas’ success include:
- Residents with disposable income
- Vast infrastructure
- Low tax rates
- Investments in advanced manufacturing and service industries
Florida, the fastest growing state in 2022, is the driving force for strong franchise growth in the Southeast. The IFA reports that “it is anticipated that the Southeast’s regional growth will outpace the national GDP growth.”
Although the slowing economy is bound to impact franchising to one degree or another, the franchise system has proven to be a valuable component to our nation’s economy. Its contributions to economic growth include:
- Substantial investments
- Entrepreneurial opportunities
- Job growth
Ready to Benefit from the Franchise Growth in 2023?
Are you interested in becoming a business owner? Franchising is the perfect opportunity. Buying a franchise not only gives you the proven structure, reputable brand, and resources that you need to succeed, but it also positively impacts the economy you live in.
If you’re ready to get started, reach out to FranNet. At no cost to you, one of our franchise consultants will walk you through all of your options and give you the guidance you need from start to finish. Schedule a free consultation today!