Franchise Employment Growth Continues to Outpace Economy-Wide Hiring

Franchise Employment Growth Continues to Outpace Economy-Wide Hiring

April 10. Franchise businesses will continue to increase and create jobs at a faster pace than the overall economy in 2015, according to the International Franchise Association. Employment and output growth for the franchise sector is expected to increase over the previous year.

“Today’s report underscores the importance of a healthy franchising sector to the growth of the overall economy,” said IFA’s president, Steve Caldeira. “Franchise small businesses are independent and locally owned. They are key drivers of job creation in a still slowly improving economy. However, the franchise sector could create even more jobs if lawmakers at the local, state and federal levels focused on pro-growth policies instead of erecting more and more public policy and regulatory hurdles that hamper growth.”

His comments are based on a quarterly update of the Franchise Business Economic Outlook prepared by IHS Economics.Caldeira said that passing comprehensive tax reform and fixing the definition of a standard work week to the traditional 40 hours in the Affordable Care Act would go a long way in helping franchise small business owners grow and create more jobs. In addition, the ongoing, politically-motivated assault against the franchising industry by the National Labor Relations Board (NLRB) and the Service Employees International Union (SEIU) is threatening the very business model that makes franchising an attractive venture for many existing and aspiring entrepreneurs. The NLRB, at the behest of the SEIU, is moving to revise the “joint employer” standard for franchisors and franchisees. Business groups including IFA, the U.S. Chamber of Commerce and the National Restaurant Association have formed the Coalition to Save Local Businesses to oppose the NLRB’s ruling and urge Congress to rein in the NLRB’s attempt to rewrite the long-standing and well-established joint employer standard.“The NLRB’s actions are hurting the very business owners who are creating much-needed jobs for the U.S. economy,” Caldeira added. “The NLRB should halt its attack on franchising before real economic damage is done.”“Our forecast for the franchise sector continues to be presented with a note of caution because recent employment actions by the National Labor Relations Board create a cloud of uncertainty over the franchise sector, which could impede the growth of the number of franchise businesses, and thus franchise employment and output,” said James Gillula, managing director, IHS Economics.Highlights from the forecast include:

Projected growth of the number of franchise establishments in 2015 is projected to reach 781,931 an increase of 1.6 percent, matching the pace of growth in 2014.

As employment growth economy-wide continues to strengthen, employment in the franchise sector will continue to outpace growth in businesses economy-wide, as it has in each of the last four years. Franchise employment is expected to reach 8,820,000 jobs, a 2.9 percent increase, while total private nonfarm employment will increase 2.7 percent.

The 2015 forecast for economic output of franchise businesses in nominal dollars continues to show an increase of $890 billion or a 5.4 percent increase– ahead of the $845 billion (5.0 percent) gain in 2014.

The gross domestic product (GDP) of the franchise sector will increase by $521 billion or 5.2 percent in 2015, an increase over the $496 billion generated in 2014. This will exceed the growth of U.S. GDP in nominal dollars, which is projected at 4.2 percent. The franchise sector will contribute approximately 3 percent of U.S. GDP in nominal dollars.


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