Franchise Economy

The International Franchise Association (IFA) today released its first annual survey on the impacts of inflationary pressures on franchised businesses. The survey, conducted by FRANdata, revealed that inflation is having a moderate to significant impact on 90 percent of franchised businesses, but being part of a franchise system has helped these businesses navigate rising prices. The report shows that the lodging sector, quick-service restaurants, and child-related services are the most impacted by inflation.

Key findings include:

  • 90% of franchisees are experiencing a moderate to substantial inflation impact.
  • The most impacted sectors include lodging (90%), quick-services restaurants (83%), and child-related services (61%), which report a substantial increase.
  • 89% of units have had to raise their prices of goods and services to absorb cost increases.
  • Sixty-four percent of respondents reported lower earnings due to rising prices, with quick-service restaurants, retail stores, and the beauty-related industry being the top three industries to feel the impact on their bottom line.
  • The most significant cost increases are driven by rising fuel prices, increases in labor cost and inventory costs.
  • 60% of franchisees expect increases in cost to get worse in near future.
  • 92% of franchisees with 11+ units say growth is constrained by labor issues.
  • Sharing best practices is one of the biggest advantages of the franchise system during a time of rising prices, followed by customer marketing, buying supplies, and resolving supply chain issues.

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