New Study On How Labor Shortages Impact Franchising

A first-of-its-kind annual report from the International Franchise Association (IFA) and FRANdata highlights how the labor shortage is impacting franchising. The results were culled from responses from more than 200 franchise executives representing 197 brands and approximately 90,000 units. The results make it clear the availability of qualified labor is the number one challenge facing small businesses and franchisors are helping their franchisees address the shortage.

“Four out of five franchise systems have experienced labor shortages in recent months,” said FRANdata CEO Darrell Johnson. “While ‘quality of labor’ is the most critical problem facing franchise businesses today, franchising is resilient and strong, as shown in the efforts made to adapt to current labor challenges during the economic recovery. One of franchising’s biggest strengths is the emphasis on extensive training programs that encompass not just technical skills but also career-enhancing fundamental skills.”

The key findings from the study include: “Quality of labor” followed by “cost of labor” are the biggest challenges facing franchised small businesses today. Nearly all respondents (87.6%) reported franchisees are having trouble finding skilled and unskilled workers.

70% of the franchise brands experienced constrained growth due to labor challenges. The average number of employees per franchised unit has decreased over the past six months. 65% reported employee wages have increased over the past six months, and 66% anticipate wage increases over the next six months.

The majority of brands have been able to maintain or increase their store operating or production hours over the past six months. Most all franchisors are providing assistance to their owners with recruitment and retention. The full findings are available here.