Report Says Franchise Growth Expected To Expand By 2.2% In 2022
By: Kerry Pipes
Published: February 23rd, 2022
Last year was a good one for franchising and 2022 looks to be another strong year buoyed by franchise job and wage growth, according to the IFA’s 2022 Franchising Economic Outlook report. That’s good news, but the report also cautions that policy proposals and economic headwinds could impact continued growth.
“At every level, local franchise businesses offer opportunities for economic and career advancement,” said IFA President and CEO Matthew Haller. “For aspiring entrepreneurs, franchising removes barriers so they can more easily open their own businesses while creating quality jobs and uplifting local economies. As we continue to navigate pandemic-related challenges, policymakers should resist the urge to adopt a hard posture against the local businesses leading our economic recovery.”
The annual study details the franchise sector’s performance over the past year and projected economic outlook for the year ahead, as well as an in-depth state outlook for all 50 states and Washington, D.C.
Key highlights from the 2022 report include:
- Following 2020 shutdowns, output for franchises rebounded by over 16% in 2021, reaching nearly $788 billion in output.
- Franchise growth is expected to stabilize in 2022, expanding by 2.2% to reach a total of 792,014 franchise establishments, 17,000 more than 2021.
- Franchises’ GDP contribution to the overall economy will remain stable at 3% in 2022, but the growth rate is likely to slow to 5.7%, still higher than the pre-pandemic level.
- In 2021, franchise employment increased by 8.8%—adding over 46,000 jobs per month. Franchise employment is forecasted to grow at a slightly lower rate of 3.1% to a total of 8.5 million jobs, back to the pre-pandemic level, a net gain of up to 300,000 jobs.
- Franchised establishments in the Personal Services sector are predicted to lead the growth in 2022, followed by Commercial & Residential Services.
On the state and regional level, the report shows that states have experienced different rates of economic recovery due to disparities in business climates, migration trends, and changes in consumer preferences. On the state level, it is predicted that:
- States in the West and South will experience the fastest upward trajectory of franchise business growth in 2022.
- The Southeast region, which has the largest franchise concentration in the U.S., will have an estimated 231,500 total establishments by 2022, employing 2.6 million workers and contributing $235.9 billion in output to the U.S. economy.
- The top 10 states for franchise growth in 2022 are projected to be: Texas, Florida, Arizona, South Carolina, Idaho, Tennessee, North Carolina, Utah, Montana, and Nebraska.
The full report is available here.
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