After three straight years of decline, the number of franchise units are projected to increase 1.9% in 2012, as jobs at franchises increase 2.1% and total revenues increase 5% to $782 billion, according to “The Franchise Business: Economic Outlook 2012,” prepared by IHS Global Insight.
The report should be of interest not only to existing franchise owners but those considering buying a franchise or looking for a growth industry in which to apply for a job.
“We estimate that franchise businesses account for 3.0% of GDP in nominal dollars,” the report says. It projects real U.S. GDP will grow 1.8% in 2021, up a tick from the 1.7% estimated growth for all of 2011.
According to IHS, personal services such as health care and education will have the fastest growing revenues of 10 major franchise sectors in 2012 growing 6.2% to almost $88 billion.
The sector expected to see the greatest percentage growth in number of franchised units is lodging – hotels and motels – at 3.1% to almost 25,600 units. “We expect continued modest gains in consumer travel and spending on lodging,” the report says.
Quick service restaurants will remain the largest sector in revenues ($201 billion in 2012), number of units (151,000) and jobs (3 million), but percentage growth will lag, according to IHS. “Higher food prices helped push up nominal sales in 2011. With employment and income improving slowing through 2012, we would expect quick service restaurants to more than hold their own when compared to the rest of the market.”
In 2012, IHS forecasts that total revenue taken in by franchised businesses will break down by sector:
• Quick service restaurants 26%
• Business services 19%
• Personal services 11%
• Lodging 10%
• Full-service restaurants 7%
• Commercial and Residential Services 6%
• Real estate 6%
• Retail products and services 5%
• Retail food 5%
• Automotive 5%
Although the economy has improved recently, HIS expects growth to slow again in the first half of 2012 because households and governments are still struggling with high debt. Because of that expectation, it forecasts only modest growth in employment and total revenues for the franchise industry in 2012.
Lee Thomas
“Helping People into the RIGHT Business/Franchise for THEIR SUCCESS
Franchise Paths to Success a dba of
Integrity Business Ventures, Inc.
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