The Economy Needs More Franchise Financing

Franchised operations are expected to create 194,000 new jobs in 2011 according to a PricewaterhouseCoopers analysis. This would be a 2.5 percent increase over 2010 and corresponds to a 2.5 percent increase in total retail outlets expected in 2011. Total employment by franchise companies is expected to be 7.8 million this year. That is why the government is focused on financing for small business as a method of job creation.

As reported in The Wall Street Journal , the International Franchise Association conducted a survey of 142 franchisees who reported they expected 2011 to be significantly better than 2010. Of that group, 30 percent considered the lack of credit as having a significant impact on their business and 25 percent considered lack of credit as having a moderate impact on their business. Franchisors similarly need small business financing in order to sell and open franchises. Without funding for small business, the franchisors cannot grow, expand or create jobs. Job relief and franchise business growth have not materialized as expected or needed. The two may be related.