Report Offers Economic Forecast for Franchising in 2021
Covid-19’s impact on franchising can’t be understated. Nowhere is it more clear than in the IFA’s annual Economic Outlook Report, which was released last week during the association’s virtual convention.
The new report examines franchising’s growth trend following the economic fallout from the Covid-19 pandemic, as well as an in-depth state outlook for all 50 states and Washington D.C. The research was conducted by FRANdata and forecasts positive growth is expected for franchise businesses in 2021, provided continued federal support, and suggests the potential to reach pre-pandemic levels of economic output by the end of the year.
“This report highlights franchising’s tremendous potential to lead our country’s economic recovery,” said Robert Cresanti, IFA President and CEO. “Through quick adaptability, scalable technology, and a focus on in-demand products and services, the franchise sector has shown its resilience time and again. In conjunction with smart policies out of Washington, franchises can help Americans get back to work.”
Highlights from the report:
- In 2020, franchise employment declined by 11.2% to 7.5 million and lost approximately 940,000 jobs, as a majority of businesses operated under reduced employment due to limited capacity and revenue deterioration.
- Overall, franchise businesses contributed $670 billion of economic output into the U.S. economy in 2020, and still represented 3% of the total nominal Gross Domestic Product (GDP).
- With significant government assistance, nearly all of the economic damage created by the Covid-19 pandemic could be erased in 2021. Specifically, franchising is projected to open more than 26,000 locations, add nearly 800,000 new jobs, and contribute $477 billion to the U.S. GDP.
- Overall franchising contribution to the economy is forecast to grow by 7% in 2021, reaching pre-pandemic levels of economic output by the end of the year.
- Fast legislative action on Covid-19 relief can jump-start the economy, specifically on vaccine distribution and school reopening.
You can view the full 2021 Economic Outlook Report online here.
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