Franchise Unit Growth Statistics

Pricewaterhouse Coopers (PwC) is forecasting 2.6% net growth in the number of new retail franchise establishments this year. If realized, such growth would far exceed the small 0.6% growth in retail franchise establishments recorded 2009; but would still pale in comparison to the 4.6% rise in establishments recorded in 2008.

The following list details PwC's 2010 forecast by retail franchise business line:

• Quick Service Restaurants: PwC forecasts the net opening of 5,759 new franchise units during 2010, representing a 3.1% increase over 2009.
• Retail Food: (Includes food and beverage stores, convenience stores and retail bakeries) PwC forecasts the net opening of 1,692 franchise establishments during 2010, representing a 2.4% increase.
• Retail Products & Services: (includes furniture and home furnishings stores, electronics and appliance stores, building material and garden equipment and supplies dealers, health and personal care stores, clothing and general merchandise stores, florists and gift stores, consumer goods rentals, photographic services, and book and music stores) PwC forecasts a 2.3% net increase, or nearly 2,000 net new stores to open in 2010.
• Table / Full Service Restaurants: PwC forecasts the addition of 1,017 net new franchised restaurants during 2010, representing a 2.1% increase.
• Automotive: (includes auto parts and supply stores, rental and leasing stores, and repair stores) PwC is forecasting a 1.8% increase in 2010, representing the net addition of 694 units.

The addition of this many new franchise units to the retail landscape in 2010 could have a significant impact on the economy. PwC estimates that if this 2010 forecast is realized, new retail franchise establishments would generate $11.1 billion in net new economic output and add 43,000 net new jobs.

A Franchise Business Leader Survey recently conducted by the IFA, which surveyed franchise executives representing all types of franchise business lines, supports PwC's findings, indicating optimism for growth amongst franchisees. Specifically, 78% of respondents said they plan to add new franchise units in 2010, while 72.5% are counting on a rise in same store sales.

In its 2010 forecast, industry research service, FRANdata said that in part, forecasted growth in new franchise units opening is in part driven by the unemployment rate. The rise in unemployment during 2009 has translated into a significant increase in the pool of potential quality franchisees. FRANdata added that franchisees are also finding a larger pool of attractive new unit site opportunities in today's market.

While the opening of thousands of new franchised stores is likely in the cards for 2010, FRANdata, quells some excitement. In its 2010 forecast, FRANdata said that while more franchisees are planning to add new units in 2010 than are not, bringing these plans to fruition may be problematic, as access to capital will continue to be restricting throughout the coming year.

Source: http://www.costar.com/News/Article.aspx?id=1726B177064F196D497179C4BE19131B