IFA Forecasts Strong 2011

For months we’ve been hearing about how the Great Recession is over. While things have slowly gotten better in the United States, the nation is still quite a distance from a real recovery. That hasn’t stopped pundits and economists from telling us that the worst has been over for a while and good times are ahead.

The latest report to offer such good news comes from the International Franchise Association. The report, which was prepared by PricewaterhouseCoopers, expects that the franchise industry as a whole should make gains in establishments, jobs and most importantly, economic output.

According to the report, the number of franchise establishments is expected to grow by 2.5 percent, the same rate at which hiring should improve. Those two factors help to contribute to the expected 4.7 growth in economic output for 2011 from franchise organizations.

But the picture is not completely rosy. Following the release of the report, IFA President and CEO Stephen J. Caldeira said, “While the forecast reflects a stronger outlook for the franchise industry and the overall economy, franchise businesses will continue to struggle with accessing sufficient credit that would enable business expansion and job growth.”

Both franchisors and franchisees say the tight credit market has severely limited their ability to expand their business. In a poll recently conducted by the IFA, nearly one-third of franchisors report that more than one-half of their franchise prospects and current franchisees were unable to get financing in the past 12 months.

It would be nice to think that as the economy improved throughout 2011, getting credit for small businesses and franchises will become easier, but that remains to be seen. The question remains, what will win in 2011, the tight credit market or a stronger, growing economy built on the franchise industry?
Tell me what you think about the IFA’s report.

Jodie Shaw

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