2021 Post-Covid Economic Outlook Sees Growth Ahead for Franchising

A recent session of the IFA’s webinar series, Economic Outlook for Franchising, took a look into what the U.S. economy likely holds for franchising in 2021 as the country climbs out of the “Covidoldrums.”

1. Big picture outlook A near-term GDP boom followed by a return to slow growth Labor: a quick recovery with unemployment rates under 5% by year-end The economy returning to its pre-pandemic payroll level well before year-end 2022 A rising inflation rate in a year or two, which will allow some pricing flexibility for the first time in years. A low interest rate environment for the foreseeable future 2) 2021 franchise business growth By year-end, franchising will have recovered to nearly 2019 levels in most metrics: business growth, employment, economic outlook, and contribution to GDP The total number of franchised establishments is expected to grow at a rate of 3.5%, a net gain of 26,000 businesses with a total of 780,188 franchise establishments in 2021, 6,585 units higher than 2019’s pre-Covid level.

Franchise employment is forecasted to add approximately 800,000 jobs in the U.S. with the hiring of 8.

3 million workers by the end of 2021. Much of this new employment will be in the retail, food, and services industries and for lower-skilled workers. Franchising sales are expected to experience their highest upswing since the last recession.

3. Growth sectors Commercial & residential services Real estate Retail food, products & services Business services 4) Recovering sectors Lodging Personal services (beauty salons, massage & spa studios, gyms, recreational facilities, child-related services, etc.) QSRs and table/full-service restaurants 5) Roadblocks to future growth Permanently changed consumer behavior Acceleration of technology adoption Increasing minimum wage impact AB5 Rule/PRO Act/Joint Employer Learn more about the IFA Economic Outlook webinar series, which continues through April 20, and download the full IFA report here.