Despite the fact that job and business development was hampered in 2021 across most industry sectors due to the effects of Covid-19, the outlook for employment and income growth with Franchises in 2022 looks promising.
The International Franchise Association (IFA) released its 2022 Franchising Economic Outlook on Wednesday, February 15, indicating that franchising is leading the economic recovery in the United States.
In particular, the study emphasizes outstanding 2021 job and business growth across all franchising sectors, ranging from personal services to lodging. In addition, the evidence suggests that 2022 is on the path to being another great year for job and wage growth in the franchising industry.
IFA President and CEO Matthew Haller said:
“At every level, local franchise businesses offer opportunities for economic and career advancement,” adding, “For aspiring entrepreneurs, franchising removes barriers so they can more easily open their own businesses. On the other side of the Great Resignation is a great reimagination that has emboldened white collar workers and store employees alike to become local business owners.”
The 2022 Franchising Economic Outlook is IFA’s annual study specifying the franchise sector’s performance for the past year and projected economic perspective for the next year, on top of an in-depth state prospect for all 50 states and Washington, D.C.
Important data from the report
Maintained by the strengthening labor market and stable consumer spending, franchising is expected to continue to expand, trending upwards with the United States’ overall economic progression. Still, growth in 2022 is most likely to stay moderate due to the current headwinds in the economy.
Franchise employment is forecasted to grow at a slightly lower rate of 3.1% to a total of 8.5 million jobs. Still, it is anticipated to recover to pre-pandemic levels following two years of COVID-era contraction. That is a net gain of almost 257,000 jobs compared to 2021. The output of franchise businesses in nominal dollars is forecast to improve by 4.9% to $826.6 billion in 2022.
Franchises’ GDP contribution to the overall economy will remain stable at 3% in 2022. However, the growth rate is likely to slow to 5.7%, still higher than the pre-pandemic level, to a total of $501 billion.
Following the 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 in 2021.
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 data show that the rate of economic recovery has been different due to disparities in business climates, migration trends, and changes in consumer preferences. The report predicts that states in the West and South will experience the quickest upward trajectory of franchise business growth in 2022.
The Southeast region, which has the most prominent 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 return to the U.S. economy. The top 10 states for franchise growth in 2022 are forecast as Texas, Florida, Arizona, South Carolina, Idaho, Tennessee, North Carolina, Utah, Montana, and Nebraska.