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Posted at 11:45 AM ET, 12/20/2012

Franchise industry’s growth expected to slow in 2013, held back by uncertainty in Washington

The nation’s franchise businesses are bracing for yet another year of weak growth in 2013, largely restrained by unanswered questions in Washington, according to new economic forecasts.


Richard Zimmer of Zoup! Fresh Soup Company, a growing franchise, speaks with Andrian Goodum after an event in Reston, VA last month. (Jeffrey MacMillan - JEFFREY MACMILLAN FOR WASHINGTON POST)
The number of franchise establishments is expected to rise merely 1.4 percent next year to roughly 757,000, a slight slowdown from 1.5 percent growth over the past twelve months, according to the International Franchise Association’s 2013 business outlook report. Economists expected those firms to see a similar deceleration in job creation, as the number of franchise employees is expected to grow 2.0 percent, down from 2.1 percent in 2012.

Even though franchisors appear to be only lightly tapping the breaks, any pullback by such a large subset of small businesses could further slow the overall economic recovery.

“Franchise businesses are now poised to accelerate growth plans, but industry leaders say the lack of confidence in our leaders in Washington to address the fundamental challenges facing our economy is keeping them and prospective investors on the sidelines,” Steve Caldeira, IFA president and chief executive, said in a statement releasing the report.

Caldeira pointed to several specific areas of concern rooted in the federal government, including overwhelming uncertainty over the tax code and proposed regulatory reform measures. Specifically, the report notes that the vast majority of franchise businesses believe that tax cuts set to expire at the end of this year, should they not be continued at all income levels, would have a detrimental effect on their business.

At the same time, healthcare costs remain the most commonly cited concern for franchisees and the second biggest concern for franchisors, with the majority concerned that rising premiums and uncertainty over new rules could make long-term planning much more difficult this year.

“We could be growing much faster, creating more new jobs and businesses, if Washington addressed the tax, spending and regulatory uncertainty plaguing the small business community in a meaningful way,” Caldeira said.

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By  |  11:45 AM ET, 12/20/2012

Tags:  small business, franchises, taxes, health care, economy, jobs

 
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