Franchising Outlook – 2nd Half of 2017

The year is now officially more than half over. We’re under new leadership in Washington and, for the most part, the leading economic indicators continue to show positive progress. Wall Street is having a field day, setting multiple new records and unemployment figures continue to tick down. In an economic climate such as this, what can we in the franchise industry predict for the second half of 2017?

In a look back to the International Franchise Association’s Franchise Business Outlook for 2017 released in January, it seems as if we’re right on schedule for a banner year in the industry. Here is one interesting tidbit from the report, quoted directly:

“States in the South and West will lead the nation in franchise employment and output growth in 2017. Economic growth in both regions has benefited greatly in recent years from renewed flows of domestic migration. In addition to the strong growth of population and personal income in these Sun Belt regions, tourism is an important driver for franchise-related growth, since the lodging and restaurant industries are among the franchise-intensive business lines.” 

Growth in the franchise industry as a whole was predicted to rise 2.3 percent in 2017. Franchise employment figures were expected to rise over three percent and franchise output was pegged at over five percent. So far, so good. The consumer index of confidence has been on the rise and shows no signs of slowing. The only economic wild card in play seems to be whether or not the Federal Reserve will embark upon a series of interest rate hikes, one of which occurred last month. Rising interest rates could hamper bank borrowing, but it’s also necessary to achieve a balance in which inflation does not become an overriding factor.

All indices in the report which reference franchise sector growth are in the positive territory. The lowest is commercial and residential services franchise growth (0.9 percent) and the highest should come as no surprise—QSR, and table service restaurants, with a growth rate of nearly seven percent.

Franchises have always been adaptive to market conditions and one small fact that came to light last year is extending into 2017 and beyond. Simply put, it involves the battle for consumer’s eyeballs. For the first time in history, mobile viewing and browsing surpassed desktop computers for consumers. This sea-change shift is expected to continue and has the potential to affect all forms of marketing outreach. In the battle to be seen, franchises will continue to have to focus their attention on capturing this segment of the marketplace in order to be successful. Social media is powerful and must be harnessed at the consumer level for franchises to remain relevant and successful. When it comes to delivering a message, Smartphones have now become a Smart Bet.

While we can never predict the future, we remain hopeful that the U.S. economic climate remains a healthy incubator for further franchising growth. There is most certainly enough geopolitical strife in the world today, but if cooler heads continue to prevail, the outlook on franchising at home should remain on track for IFA’s original assessments.

Here’s to six more months of positive growth, news and outlooks for the franchising industry.

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Jul 6, 2017