3 Things You Should Know About Small Business: September 10
NEW YORK (TheStreet) -- What's happening in small business today?
1. Franchise growth is lagging. Franchisors are wary of expansion due to the anticipation of higher taxes and continued trouble in accessing credit, according to the International Franchise Association's third-quarter update of its 2012 economic forecast.
The IFA has revised its forecast for franchise creation for 2012. It now expects the number of new franchise establishments in the U.S. to increase by 1.5% this year compared to an initial forecast of 1.9% and a decline in establishments since 2009.
Despite the declines, jobs and output are expected to outpace the overall economy, the IFA says. The association is assuming modest growth across the 10 major business lines in the franchise sector.
"There is a wealth of job creation waiting to be tapped in the franchise sector, but existing and prospective franchise business owners are waiting on the sidelines to open new stores until they have more certainty and confidence that Congress will not raise their taxes," IFA CEO Steve Caldeira said.
"Despite the headwinds facing small businesses, the franchise industry is still growing at a faster pace than the overall economy, signaling the strength of the franchise business model," Caldeira said. "New franchise businesses will be opening across all 10 business lines for the first time since 2008. If policymakers want to find more ways to support job creation, they should look at ways to help spur more growth in the franchise industry by pursuing pro-growth policies including comprehensive tax reform."
Sectors that are adding establishments above the overall industry average of 1.5% are business services (2.2%), lodging (2.2%), quick service restaurants (1.9%), personal services (1.9%) and table/full service restaurants (1.7%), the report says. Those adding jobs above the industry average include business services, personal services and retail food franchises overall.