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Franchising In The Downturn And Recovery

Posted By Scott Shane On July 9, 2012 @ 8:00 am In Franchise | 6 Comments

Franchised businesses performed relatively well during the Great Recession and weak economy recovery that followed.

economic recovery

According to data provided in the Franchise Business Economic Outlook: March 2012, [1] prepared by IHS Global Insight for the International Franchise Association Educational Foundation, the number of franchised establishments declined 3.1 percent; the number of employees at franchised outlets fell 2.4 percent; and the inflation-adjusted dollar value of output dropped 2.2 percent between 2007 and 2009.

These numbers are relatively modest in comparison to what happened to the economy as a whole.

Moreover, franchised businesses have rebounded relatively strongly since 2009. While the number of franchised establishments declined an additional 1.5 percent from 2009 to 2011, employment at franchised outlets grew by 1.7 percent. Moreover, the inflation-adjusted value of output increased 3.6 percent over the two-year period.

Efficiency is higher now than before the recession. By shrinking the number of outlets, and increasing employment at the locations that remained, owners have improved both output per outlet and output per worker. Output per establishment increased 6.1 percent in real terms from 2007 to 2011 – up from an average of $969,000 to $1,028,000 in 2012 dollars. Output per worker rose 2.1 percent in inflation-adjusted dollars, increasing from $93,400 to $95,400.

Economic Recovery [2] Photo via Shutterstock


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URLs in this post:

[1] Franchise Business Economic Outlook: March 2012,: http://emarket.franchise.org/FranchiseBusinessReport2012.pdf

[2] Economic Recovery: http://www.shutterstock.com/pic-42461428/stock-photo-market-going-up.html