Franchising plays a vital role at both the national level and the state level. Franchise businesses support state economies through job creation, promotion of output, and GDP contribution.
RECOVERY THROUGH ESTABLISHMENT GROWTH
In response to the crisis, franchise business owners have continuously made adjustments and shared best practices across the franchise community. This collaborative process has led to improvement in existing businesses and the creation of thousands of new franchises.
As the pandemic recedes, the improvements made in 2020 will remain and yield even greater benefits. Therefore, it was forecasted that the total number of franchise establishments to experience a full recovery by the end of 2021 will expand at an accelerated rate of 3.5% to 780,188 nationwide.
By the end of 2021, all of the eight business lines are expected to sustain growth (business services, commercial & residential services, lodging, personal services, quick-service restaurants, real estate, retail food, products & services, and Table/Full-Service restaurants). The commercial and residential services sector is predicted to continue to lead the recovery, expanding at a rate of 3.4%, followed by the restaurant sector. Restaurants are likely to recuperate at a faster pace, as long as a widespread vaccination effort paves the way to higher consumer spending.
RECOVERY THROUGH JOB CREATION
It is anticipated that before 2021 ends, franchise employment will add approximately 800,000 jobs to the US job market, through the hiring of8.3 million workers.
A loss of approximately 940,000 jobs has been experienced by the franchise sector last year because of an 11.2% employment decline. Job losses
were mostly seen in lodging, restaurants, and personal services
sectors.
The uplift in franchise employment is projected to be driven by the
commercial & residential services and real estate sectors, which
have already outperformed other sectors in 2020. Restaurants
and lodging will follow as people begin to take more business
and leisure trips again. The personal services sector will drive
job creation as consumers look to spend more on personal care. It is also expected that childcare will also recover as parents slowly return to office jobs.
RECOVERY THROUGH OUTPUT CREATION
Backtracking 2020, lodging and restaurants suffered the most revenue losses. Based on a study conducted by the National Restaurant Association Research Group in November of 2020, 87% of full-service restaurants (independent, chain, and franchise) reported an average drop of 36% in revenues. In the face of losses, some franchise businesses saw improvements in 2020. The commercial & residential services sector had a sales growth rate of 7.7%, due to numerous home construction/renovation activities and increasing new
home sales. The retail food, products, & services sector also helped uplift overall franchise output. Based on a study conducted by the Food Industry Association, most food retailers (61%) said the local and national economies in 2020 positively impacted their businesses.
Total franchise output in 2021 is projected to grow by 16.4% and contribute a total of $780 billion to the US economy. As the job market surges, franchises are expected to steadily return to normal sales and output levels.
INDUSTRY GROWTH OVERVIEW
Due to the evolving consumer preferences, current economic
conditions, and government regulations caused by the pandemic, some sectors bloomed and others lost a lot. Some sectors have benefited from the changes, especially in the Business Services, Commercial & Residential Services, Real Estate, and Retail Food, Products, & Services sectors. Still, some sectors suffered devastating losses, including Lodging, Personal Services, Table/Full-Service Restaurants, and Quick Service Restaurants sectors.
With the vaccine rollout and the potential for new federal relief, 2021 is currently positioned for healthy growth and robust economic recovery. The economy is slowly reopening and consumer spending is dramatically recovering, pent-up demand and personal savings have propelled a rapid growth, with franchising well poised to LEAD.
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Read the whole article here: https://www.franchise.org/sites/default/files/2021-02/Economic%20Outlook%202021_web2.pdf