2021 Post-Covid Economic Outlook Sees Growth Ahead for Franchising

By: Eddy Goldberg
Published: April 1st, 2021

A recent session of the IFA’s webinar series, Economic Outlook for Franchising, took a look into what the U.S. economy likely holds for franchising in 2021 as the country climbs out of the “Covidoldrums.”

This session of the webinar series was presented by FRANdata CEO Darrell Johnson. We present some highlights below. Learn more about the series using the link at the bottom of the article.

1) Big picture outlook

A near-term GDP boom followed by a return to slow growth
Labor: a quick recovery with unemployment rates under 5% by year-end
The economy returning to its pre-pandemic payroll level well before year-end 2022
A rising inflation rate in a year or two, which will allow some pricing flexibility for the first time in years.
A low interest rate environment for the foreseeable future

2) 2021 franchise business growth

By year-end, franchising will have recovered to nearly 2019 levels in most metrics: business growth, employment, economic outlook, and contribution to GDP
The total number of franchised establishments is expected to grow at a rate of 3.5%, a net gain of 26,000 businesses with a total of 780,188 franchise establishments in 2021, 6,585 units higher than 2019’s pre-Covid level.
Franchise employment is forecasted to add approximately 800,000 jobs in the U.S. with the hiring of 8.3 million workers by the end of 2021. Much of this new employment will be in the retail, food, and services industries and for lower-skilled workers.
Franchising sales are expected to experience their highest upswing since the last recession.

3) Growth sectors

Commercial & residential services
Real estate
Retail food, products & services
Business services

4) Recovering sectors

Lodging
Personal services (beauty salons, massage & spa studios, gyms, recreational facilities, child-related services, etc.)
QSRs and table/full-service restaurants

5) Roadblocks to future growth

Permanently changed consumer behavior
Acceleration of technology adoption
Increasing minimum wage impact
AB5 Rule/PRO Act/Joint Employer

Learn more about the IFA Economic Outlook webinar series, which continues through April 20, and download the full IFA report here.