2023 Annual Franchisee Survey
The International Franchise Association's (IFA) 2023 Franchisee Survey shows the impacts of inflationary pressures on franchised businesses. The report highlights that while inflation is improving as compared to 2022, it is still having a significant impact on franchised businesses across all sectors with the cost of labor being the biggest driver. The report also highlights a number of ways that being part of a franchise system provides advantages for navigating rising costs.
Key findings from the report include:
- 86% of franchisees reported feeling the effects of increasing costs on their operations, a marginal decline from the prior year.
- Nine out of ten business units raised their prices to combat cost increases.
- Three out of the top five industries experiencing the greatest impact from inflation were from the food category.
- Labor remains the most significant challenge for rising costs, followed by insurance costs and cost of inventory. Fuel pressures have eased.
- In line with 2022, businesses are increasing prices of goods and services and observing lower earnings due to inflation. 64% of franchisees are observing reduced business earnings attributable to inflation.
- The percentage of franchisees expressing pessimism regarding future inflation remains elevated, with 51% expecting inflation to get worse.
This is IFA’s second Annual Franchisee Survey looking at the impacts of inflation, conducted in August of 2023 from nearly 1,300 franchisees nationwide across business lines. To compare, the 2022 findings are available here.