For immediate release
Alisa Harrison, 202-628-8000
Matthew Haller, 202-662-0770
WASHINGTON, April 25, 2012- The Franchise Business Index (FBI)-an index of the economic health of the franchise sector-showed no gain in March, the International Franchise Association announced today. The index held at a value of 107.7 (Jan 2000=100). This is a 1.3 percent increase compared with March 2011.
The FBI showed increases of 0.3 percent in three of the preceding five months ending in February. In March, increases in components measuring consumer demand for franchise industry products and services and labor market conditions in the franchise sector were offset by declines in the index components for small business optimism and small business credit conditions.
"Trends in the index over the last several months show we are moving in the right direction, but gaps in credit access are still apparent across many franchise sectors," said IFA President & CEO Steve Caldeira, "More certainty in the tax and regulatory environments would help franchise businesses grow faster, creating more jobs and economic benefits at the local, state and national levels."
Consumer spending increased in March in all of the individual categories that make up the spending component of the FBI. Gains were strongest in the automotive and retail products and services areas. Employment growth continued to boost the index, and a small decline in the unemployment rate also made a positive contribution in March.
The importance of credit availability to the franchise sector was highlighted at IFA's 2nd annual Small Business Lending Summit held April 17th. At the Summit, IFA released a new report that shows a bank lending shortfall could cost the franchise industry 94,000 jobs. A coalition of trade groups representing the financial services and small business communities announced an expanded private-sector partnership to strengthen small business lending and spur job creation.
Revised data were also incorporated for February for all index components. The February index value remained unchanged at 107.7 - an increase of 0.3 over the January index reading.
Designed to provide more timely tracking of the growing role of franchise businesses in the U.S. economy, the Franchise Business Index was developed by IHS Global Insight on behalf of the IFA. The FBI combines indicators of growth in the industries where franchising is most prevalent and measures of the general economic environment for franchising.
Index, Jan 2000 = 100
Source: IHS Global Insight, April 2012
About the IFA Franchise Business Index
The Franchise Business Index is a measure of the economic environment for franchise business activity constructed with timely economic indicators that provide a current reading of the industry's health. It combines indicators of the growth or decline of industries where franchise activity has historically been concentrated with measures of the demand for franchise business services and the general business environment.
The components of the IFA Franchise Business Index for the U.S. include:
- Employment in Franchise-intensive Industries* (BLS)
- Number of Self Employed* (BLS)
- Unemployment Rate* (BLS)
- Consumer Demand in Franchise-Intensive Services* (BEA)
- Small Business Optimism Index* (NFIB)
- Small Business Credit Conditions Index* (NFIB)
Research for the IFA Franchise Business Index and the quarterly forecast reports is underwritten by a generous grant from Jani-King International to the IFA Educational Foundation.
*For more information about the components and the methodology, click here.
About the International Franchise Association
The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.