In a recent blog post, “Two Reports Show Franchise Growth Expected to Increase at Fastest Rate in Five Years,” TravelandTourWorld.com provides an excellent summary of the key findings in two major reports from economic consulting firms specializing in franchises.
Given the strong presence Sintel Systems has in the retail, restaurant and service industries’ point of sale marketplace, we share these service sector growth trends with our customers and franchise hopefuls looking for key insights and opportunities in order to help them make the best decisions from the very beginning.
The encouraging summary was based upon FRANdata’s 2014 Small Business Lending Matrix & Analysis, created for the International Franchise Association Educational Foundation, and HIS Global Insight’s June update to the International Franchise Association Franchise Business Outlook.
Here are some of the highlights from the TravelandTourWorld.com post:
• Writing in the 2014 Small Business Lending Matrix & Analysis, FRANdata says demand for franchise units is expected to increase more than 12 percent in 2014, the highest rate of increase in five years.
• The lending shortfall for franchises (that is, the difference between projected loan demand and loan supply) is expected to be one-half that of last year’s figure.
• FRANdata foresees franchise demand from both new and existing franchisees exceeding 73,800 unit transactions in 2014, a 12.4 percent increase in demand over 2013, and an 18.8 percent increase over 2012.
• Franchise businesses will require $29.4 billion in lending to satisfy the increased demand, and FRANdata expects that banks will make $28.1 billion available. Their report says the funds will provide financing for 70,500 unit transactions, which will create or maintain more than 1 million jobs and support $138 billion of annualized economic output.
• The funding gap between the demand and supply was the largest in 2010 at 16.6 percent. FRANdata projects the lending gap to diminish by half in 2014, from 9.7 percent in 2013 to 4.4 percent this year.
• “The FRANdata report also notes that franchise operators’ willingness to invest in old and new units is driven by an improved housing market, higher equity prices, and consistent increases in personal income,” writes TravelandTourWorld.com. “Meanwhile, bank lending to small businesses is expected to rise due, in part, to the rise in commercial real estate values and the overall improvement in the health of the financial system.
• IHS Global Insight (ISHGI) foresees the franchise sector leading an economic rebound by creating an estimated 220,000 jobs this year.
• ISHGI expects 2014 U.S. franchise employment to increase by 2.6 percent by adding 221,000 new jobs, 0.8 percentage points higher than the projected total employment growth. Franchise employment grew 2.5 percent in 2013.
• ISHGI estimates the number of franchising businesses to increase by 12,566 in 2014, a rate of increase in line with the overall growth rates for business formation across all sectors of the economy.
• ISHGI’s forecast of 4.6 percent growth in the gross domestic product of the franchise industry equates to a $22 billion increase for the sector. Last year’s growth rate was 4.3 percent.
• “With seven out of 10 franchise business lines adding jobs faster than the private sector at-large, the franchise business model continues to provide jobs and entrepreneurship opportunities for workers and entrepreneurs in sectors as diverse as hotels, auto, business and personal services and restaurants, ” said Steve Caldeira, IFA president & CEO, quoted in the post. “One reason for this success is that credit is steadily becoming more available for franchise expansion.”
• The Franchise Business Outlook reports that franchise industry growth has out-performed the overall economy for the past six years.
Read the full TravelandTourWorld.com post here.
Sintel is the only full-service, direct-to-user point of sale provider — no resellers, no middleman. From software development to franchise incubator to ongoing support, part of Sintel’s commitment to our customers and industry is to share information on how to achieve success.
Yes, your timing is perfect but before you make your franchise move, consider calling Sintel Systems for a free phone consultation to help weigh and understand your options. We serve as a franchise incubator for clients across the retail, restaurant and service industries, forming lasting partnerships with our clients that you simply can’t get from a reseller.
If you are interested in learning more about Sintel’s point of sale (POS) systems and how our knowledge and support can impact your future success, call us for a complimentary phone consultation.
Sintel Systems is the only direct to end user full-service provider of tailored Point of Sale systems across retail, restaurant and service industries, including frozen yogurt shops, pizzerias, sushi restaurants, cafés and retail stores.
As a single source for business solutions, our experienced, knowledgeable team negotiates the complex POS landscape for you to enable you to find the right POS system for your business and budget. Hardware – Software – Support