Saturday, March 24, 2012

Franchising Forecasted To Grow in 2012


Franchising — the act of launching a small business by buying into a proven business model such as  — is expected to grow in 2012 and to play a part in private-sector job creation that could aid the overall economy. 

After three years of decline, the number of franchise establishments is expected to increase nationally by 1.9 percent in 2012 — adding 13,928 new locations to an existing 735,751 units, a recent report projects. In 2011, franchises employed 7.9 million workers, a pool that is expected to increase by 168,000 mostly entry-level jobs, according to the 2012 Franchise Business Economic Outlook by IHS Global Insight, a forecasting and financial analysis firm. 

The report also forecasts that franchises will fuel a 5 percent growth in economic output this year, adding $37 billion to last year’s total of $745 billion. In 2011, franchises accounted for $439 billion of the U.S. Gross Domestic Product, an amount expected to increase in 2012 by 4.8 percent, or an additional $21 billion.

 
2012 forecast for franchises in U.S.
1.9 percent growth in establishments • 13,928 new sites
2.1 percent growth in employment • 168,000 new jobs
5 percent growth in economic output • $37 billion increase
4.8 percent gross domestic product growth • $21 billion increase
Source: 2012 Franchise Business Economic Outlook, compiled by IHS Global Insight
What is a franchise?
An agreement or license between two legally independent parties that gives …
1) a person or group of people (franchisee) the right to market a product or service using the trademark or trade name of another business (franchisor)
2) the franchisee the right to market a product or service using the franchisor’s operating methods
3) the franchisee the obligation to pay the franchisor fees for these rights
4) the franchisor the obligation to provide rights and support to franchisees
Source: International Franchise Association


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