TL;DR
Franchise sales data shows a decline in leads and closed deals heading into 2023, suggesting a potential recession impact on franchising. Franchisors are still bullish on system-wide franchise sales in 2023, with 33% anticipating a sales increase of 1% to 5%.
Recent FranConnect data shows how an impending recession could impact franchising in the new year.
Franchise sales data for Q3 2022, compared with the same quarter in 2021, supports the probability that we are entering a similar cycle to what we saw during the Great Recession, Franchising.com reports. In 2021, there was a decline in leads of 22%, but franchise sales actually increased by 12% year-over-year.
However, the following FranConnect data shows how some deals are being pushed back in these uncertain economic times:
Q3 2021 total leads: 314,430
Q3 2022 total leads: 195,213
YOY Change: ?119,217; ?37.92%
Q3 2021 closed deals: 3,265
Q3 2022 closed deals: 2,053
YOY Change: ?1,212; ?37.12%
On the flip side, franchisors do appear to be more bullish in regard to system-wide franchise sales in 2023:
33% of franchisors anticipate a sales increase of 1% to 5% in 2023
30% of franchisors anticipate sales up 6% to 10% in 2023
20% anticipate their franchisees’ revenues will increase by 11%
Only 6% in total believe that they will be negative, between 1% and 5%
And 6% believe that they will be negative between 6% and 10%
In this story
This story was originally published in 1851 Franchise on December 22, 2022. Burnaze summarizes and links to the original reporting.
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