Franchises Expected to Grow Faster Than Economy in 2014

Jan. 13, 2014 – Franchise businesses are expected to grow faster and create more jobs than the rest of the economy again in 2014, according to research released by the International Franchise Association (IFA) Educational Foundation. Developed by IHS Global Insight, The Franchise Business Economic Outlook: 2014 reveals that growth in franchise establishments, output and contributions to U.S. gross domestic product will exceed that of 2013.

“Throughout the recession and tepid, uneven economic recovery, the strength and entrepreneurship of the franchise sector has been a consistent job creator for the U.S. economy,” said IFA President & CEO Steve Caldeira.

Key findings from the business outlook include:

  • Franchises are expected to add nearly 200,000 new jobs in 2014.
  • The pace of employment gains is expected to remain steady compared to 2013, but will continue to outpace total private sector employment growth by 0.3 percent.
  • The number of franchise businesses in 2014 is expected to rise by 12,915 in 2014, bringing total establishments to 770,368.
  • The 2014 establishment growth rate is expected to rise to 1.7 percent from 1.4 percent in 2013. This will continue to be in-line with the growth of overall business formation across the economy.

Within the franchising sector, business services, commercial and residential services, and quick service restaurants are expected to be drivers of job creation of 2014. With the fastest growth rate, business services is expected to add 35,109 franchise jobs in 2014, while quick service restaurants, the largest sector in franchising, is expected to create 75,596 new jobs.

“Reduced fiscal drag, improved consumer spending, continued gains in housing market activity and stronger export growth are driving slightly higher growth forecasts in 2014,” said IHS Global Insight Senior Economist Jim Gillula. “While improved, these forecasts are still below pre-recession growth rates.”

Caldeira also called for reform of both the individual and corporate tax codes. “Franchises have demonstrated throughout these past several years that we can grow and create jobs, but it’s past time for Washington to do its part and focus on pro-growth policies, including comprehensive tax reform to unlock America’s growth engine,” he said.

This mirrors the IFA’s Franchise Business Leader Survey, which found that more than 90 percent of franchisors and franchisees want to see a simplified tax code with lower individual and corporate tax rates.

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