The International Franchise Association has just released its 2023 Franchising Economic Outlook report which includes a number positive predictions for the industry. The study finds that franchise unit and job growth continues to outpace pre-pandemic levels, despite economic challenges and uncertainty. Specifically, the report says franchises will add more than a quarter-million jobs and another 15,000 new independent businesses this year.
“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.”
Here are some key highlights from the report:
- 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.
- The report also examines franchise business growth at the state and regional levels, examining different rates of franchise business growth due to disparities in business climates, migration trends, the labor market, and major industry investments.
Here are some predictions on the state level:
- 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.
The 2023 Franchising Economic Outlook was conducted by FRANdata and is IFA’s annual study detailing the franchise sector’s performance for the past year and projected economic outlook for the year ahead.
Published: April 5th, 2023