Economic News: What Job Growth Means for Franchising

It’s been a difficult couple of years for businesses across the board, but signs of hope are finally starting to stick around. With more new jobs being added and unemployment numbers on a downward trend, the future is looking brighter, even while the job market is still a bit tougher than normal. For franchises, this is exactly the news everyone has been hoping for.

 

In short, the “new normal” may finally be arriving, after several false starts. The biggest indication of this positive trend is the latest jobs report, which shows that job growth is happening (and happening on a large scale), even taking into account new waves of the virus. The New York Times’s January 2022 jobs report revealed some significant numbers pointing to good signs for jobs and for the economy overall.

 

Employers added about 467,000 jobs in January, according to the Times. This is even more remarkable, given that these numbers are heavily skewed towards the weeks where the omicron surge was peaking and putting massive stresses on society as a whole. In fact, these job numbers are actually higher than experts had projected.

 

A bit of tempered optimism is warranted. Pure “new job” numbers aren’t a perfect measure of economic recovery; other measures show that job growth and unemployment are still major struggles for many companies and employees alike. Still, it’s a sign that the business world is more resilient right now than it has been in some time, and businesses are bouncing back even better than expected. Compared to a year ago, we have better medical care and knowledge, which have helped immensely. In theory, even with COVID here to stay and unlikely to truly be “eradicated” wholesale, more knowledge means more ability to fight back and keep people safe – and that means that business and other parts of “normal” life can stay the course.

 

Because of how closely linked the franchise sector is to the overall economy, good news for one is usually good news for the other. Just look at a few of these statistics from the International Franchise Association:

 

• 26,000 new franchises in 2021
• Franchises provided over 8 million jobs
• Many of these jobs in sectors (like food service) that were disproportionately affected by COVID related downturns
• Contributing around $780 billion to the US economy

In general, a strong job economy signals that franchises are rebounding too. It’s not a time to be complacent, but rather a time to find the sweet spot for what business will look like going forward. Franchises do still need to compete for talent in a job marketplace that looks rather different than a few years ago. Workers have had a permanent shift in thinking about work and values, and franchises must too.

 

This holds especially true for franchises in service-oriented sectors, like hospitality and food. For workers in this sector, the past couple of years have been particularly difficult. There’s been the overall downturn, resulting in lower hours and pay, as well as constant uncertainty. Most of all, employees in these industries have dealt with a wide range of challenging or outright hostile customers. It’s easy to understand why many workers may be wary of working in these industries, which is why it’s such good news to see those businesses rebounding and starting to grow again.

 

Franchises are a crucial part of the rebound and of the economy overall. According to Forbes and the SBA, approximately a third of small businesses and new ventures close by their second year, while less than half make it to the five year mark. Franchising is a different option: rather than starting a new business altogether, it’s part of a larger “family” with all the support that entails. Marketing support, existing knowledge base and expertise, and administrative support are all things that can help a new location get off the ground, where individual businesses might not have that help and might falter for lack of it.

 

In the end, these individual franchises succeeding is a net positive not just for the owners, but for everyone. A business being more likely to stay open also means that it’s more likely to be able to keep jobs in the local economy, for a longer period of time. Franchises truly can become part of their local communities and earn a lot of trust and respect. They’re the perfect combination of a local face and story with a familiar, trusted brand name. Because of this unique position they occupy in the business world, it’s no wonder that the success of the franchise sector overall is so closely linked to broader trends in the economy and the job market.

 

As the economy rebounds and job growth rises, it’s a better time than ever to be in the franchising sector. Stay the course, put people and communities at the forefront, and the advantages of franchising will keep doors open and keep franchises as leaders in job creation and business growth.

 

By Nancy Estep-Critchett

 

About the Author

Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.

 

Blue Rock Search is a 100% minority/female-owned executive search firm, an SRA Network member, a Hunt Scanlon Top 10 global recruiting firm, and a member of the Hunt Scanlon HR/Diversity Recruiting Power 65.  We specialize in the targeted identification, assessment, and placement of executives across four distinct practice areas: Human Resources, Franchise, Higher Education, and Customer Experience.