WASHINGTON -- The International Franchise Association (IFA) has released a new survey revealing mounting concerns and decreasing optimism by franchise executives regarding overall business conditions and the outlook for credit access and job creation in the industry.
"New, bipartisan ideas must be developed by the administration and Congress in order to boost the sapping confidence of America's franchise small business owners and aspiring entrepreneurs," said IFA president and CEO Steve Caldeira. "Inaction at this juncture will only result in continued [stagnation]."
IFA's latest Business Leader Outlook Survey, conducted in mid-August, shows a majority of respondents are expecting conditions to stay the same or worsen, compared to the previous survey conducted in March. In the most recent data, only 47.3% said they expect their business to do better this year as compared to last year, down from 54.9% in March.
In addition, franchise executives have also lowered their expectations about any improvement in credit access over the next 12 months. In the March survey, nearly half (48.8%) said they expected to see "moderate improvement" in the months ahead, which has dropped to only 27.3% who now say they expect to see "moderate improvement" in the months ahead.
Nearly two-thirds of those polled in August (64%) reported "no improvement" in this area in recent months, up from 62% who said so in March.
According to IFA research, there is a direct correlation between franchise business access to credit and job creation. For every $1 million in lending to franchises, 40 jobs are created.
IFA's survey results were echoed by continued modest jobs data released this week by payroll processing firm ADP. The unemployment rate is expected to continue to remain flat at 9.1% following the U.S. Department of Labor's monthly release of jobs numbers.
"Without a return to pro-growth policies, the small-business owners who account for over 65% of all U.S. jobs will continue to struggle to stay afloat and create the jobs and economic output the country so desperately needs," said Caldeira.
Another matter of concern to franchises is health reform. Four out of five respondents to the August survey (81%)– said they have a "negative" or "very negative" view of the health-care law implemented last year, while nearly four out of five (79%) said they expect business costs to "significantly" or "very significantly" increase because of it. Less than 5% of those polled had a "positive view" and less than 1% had a "very positive view" of the legislation. Roughly 11% said they were "neutral" and about 5% expect business costs to "decrease" or "significantly decrease."
IFA members include franchise companies in more than 90 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.
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