QSR & Pizza Fueling Franchise Growth

Fast-Food-2Each year the International Franchise Association commissions a study from PwC (PricewaterhouseCoopers) on the economic impact of franchising in the U.S. Highlights from that study include the following:

  • Taking into account the indirect impact of franchised businesses, business format franchises support more than 13.2 million jobs, $1.6 trillion in economic output for the U.S. economy, and 5.8 percent of the country’s GDP.
  • Franchise businesses provided more jobs in 2016 than wholesale trade, transportation and warehousing, nondurable goods manufacturing, and information (including software and print publishing, motion pictures and videos, radio and television broadcasting, and telecommunications carriers and resellers).
  • Quick service restaurants (QSR) is the largest category, representing 25 percent of all franchise establishments and 45.5 percent of all franchise jobs.
  • Jobs supported because of franchise businesses were at least 10 percent of the private sector nonfarm workforce in 33 states, and at least 6 percent in every state.
  • The number of people employed by franchises is greatest in California, Texas, Florida, Illinois, and Ohio.
  • Franchisees own and operate 88 percent of all business format franchise establishments and franchisors own and operate 12 percent.

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Quick Serve Franchise Sector Continues to Blaze a Trail for Franchising

There is little doubt that the franchise industry is undergoing significant changes fueled in great part by the success of various PE firms that began in the QSR sector. As other franchise sectors are targeted by PE investors, the competitive environment in those sectors will become more challenging. In order to prepare for these challenges, small to medium sized franchises will need to become successful franchise systems that produces sustained system growth, successful franchisees and an efficient operating system.

Multi-unit franchisee ownership that originated in the QSR sector continues to increase as franchisors seek large multi-unit franchisees that can own and operate more franchise units.This ownership model provides organizational stability, ample financial resources, sustained growth and economies of scale to the franchisee operation.

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Who’s Winning the Pizza Wars?

Welcome to the pizza wars, where brands big and small, quick-service and fast-casual alike face two choices: pick up the pace and earn relevancy through definitive, clear marketplace differentiation or step aside.

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Franchising Supports Small Business Saturday

Small Business SaturdayYes, progress is being made and franchising is being recognized more and more by American Express in their Small Business Saturday efforts. When launched in 2010, franchises were not included in Small Business Saturday, being excluded with a specific clause in Small Business Saturday literature to merchants interested in participating in the new program. I was definitely surprised and although we still have a way to go I’m happy to say the past two years have seen franchises included in the list participating businesses. And that is great!

When I first realized franchising had been excluded I was quite surprised. Sure, as many are aware, I did flood the social media space with several blog posts about franchising being excluded. No need to regurgitate that any further and I’m not including links to those posts here as American Express did respond, and in a very positive way. They truly wanted to learn more about franchising and its role in small business today and I was more than willing to help. You see, despite the role American Express plays in business today and despite the fact that AMEX executives are very well-educated and understand business, they had huge misperceptions about franchising. Several of the AMEX executives I met with actually thought all franchises were just like McDonald’s – big and powerful! They also incorrectly thought McDonald’s and other [large] franchisors paid for all advertising on behalf of its franchisees. Thus, they excluded franchising, thinking all along that all franchisees had it made in the shade over independent small business owners.

Well, I was happy to share many statistics about franchising and the fact that many franchisees are the same Mom & Pop operators that built their businesses on Main Street USA. Just like many independent small business owners, they have invested their life savings in pursuit of the American Dream. And just like small business owners everywhere, they continue to fight off big box retailers and department stores alike for a slice of every dollars expended by today’s consumer.

Fortunately, American Express listened, and I was quite impressed. Unfortunately, and to my dismay things did not move along as quickly as I would have liked and although progress was made and franchising was included, but limited in the subsequent years since 2010, I was extremely anxious and wanted full inclusion for franchising, and I wanted it now! What I was missing and fully realize now, thanks in part to Tom Epstein, CEO at Franchise Payments Network, is that American Express, albeit a huge organization has a difficult time making abrupt changes to programs as there are many considerations… many financial ones that I had not even considered such as the sheer cost of marketing materials, just to name one of many.

In any event, I was excited to see Tom contribute to the effort of getting franchising more involved in Small Business Saturday. He has spent a great deal of time learning as much as he could from his various contacts at American Express. I believe the efforts are paying off and will continue to do so year after year. Others within the franchise community, including the International Franchise Association have contributed as well, and I applaud their efforts. Speaking of the IFA, I’d like to take this opportunity to thank them for all they do in promoting franchising as without those ongoing efforts we’d truly be dead in the water. You see, just as American Express promotes “Membership has its Privileges” so, does membership in the IFA.

So, on this Small Business Saturday, let’s pull out those AMEX cards, whether they be green, gold, platinum, blue, plum or black and spend away at small businesses across our great nation. Happy shopping!

Franchises Excluded from Small Business Saturday – AMEX Responds!

Well, I am happy to say that I have been in touch with AMEX as one of their VPs contacted me directly and apologized for their exclusion of franchising. They just missed the boat on franchising being an integral part of small business. They never even considered franchisees as Moms and Pops investing their money in a small business of their own. All their thoughts were focused on the giants of franchising and not the smaller franchises. Although, I did communicate that even the McDonalds franchisees are small business owners themselves. The long and the short is that AMEX knows they committed a huge blunder in excluding franchising.

Rosa Alfonso, the AMEX VP that contacted me directly, wants to set up a conference call next week with several other AMEX VPs to start down the road of getting franchising involved in next year’s Small Business Saturday. I am so excited they took notice and are willing to do something about it.

As much as I would love to be front and center on this, I recognize that it should not be without the IFA. This is about franchising being recognized as an essential component to America’s economic recovery, as IFA President, Steve Caldeira has promoted since leading the IFA. It’s about continuing to educate, not only the masses, but even the giants of business like American Express. I’m sure Steve and his staff could think of many ways this can further benefit franchising.

To that end, I have reached out to Steve Caldeira and will defer to him and the IFA staff in moving forward. Of course, I look forward to being involved as I am passionate about franchising!

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