New Franchise Index Points to Continued Growth

RevenueA newly published economic index shows the prospects of the franchise industry improving. During the past half year, the tide against franchises has reversed, suggesting that good times await millions of prospective franchise owners.

Franchises around the country now report favorable economic conditions. An owner of a new home inspection franchise in Herndon, VA says his business has seen impressive responses to marketing efforts and sees that as a sign of good things to come. Meanwhile, 7-Eleven announced that it will open 80 new franchise locations in Florida in coming months and years.

The International Franchise Association publicly announced its new Franchise Business Index on Thursday for the first time, heralding a .3 percent increase to 107.7. The index, though previously unpublished, has increased over six consecutive months and surpassed its level from the previous year. A company called IHS Global has joined forces with the IFA to build the index using both government and industry data. The index uses numbers from the year 2000 to establish the baseline for the index.

IFA executives describe the FBI as an index that measures the unique attributes of franchise businesses. The index fluctuated during most of last year, but picked up starting in September. Recent improvements to the index have stemmed mostly from increased consumer demand. Improving employment data and small business optimism also helped sustain the index in recent months. Some factors, such as the credit market, remained constant from February.

Not every number in IFA data offers strong optimism. Franchise growth will slow during the year, although the data will likely remain in positive territory. Growth estimates have decreased from 1.9 percent to 1.6 percent. IFA spokespeople say that continued uncertainty in taxation and regulations within the United States will continue to throttle growth. Once government policy solidifies, many experts expect franchise growth to accelerate, contributing to the job market and national economic output.

Read more at The Washington Post.