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Franchise Business Index Up 0.5% In April - Improved Credit Access and Employment Growth Key Reasons for the Increase

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Alisa Harrison, 202-628-8000
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mhaller@franchise.org
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WASHINGTON, May 23, 2012— The Franchise Business Index (FBI)—an index of the economic health of the franchise sector—showed a gain of 0.5 percent in April, the International Franchise Association announced today.  The index increased to108.3 (Jan 2000=100).  This is a 1.8 percent increase compared with April 2011.   

All components of the index contributed to the April increase.  Improvements in small business credit conditions gave the biggest boost to the index in April, reversing a March decline.  Employment growth in franchise-related industries and a small decline in the unemployment rate also made a positive contribution.  The contribution of consumer demand for franchise industry products and services weakened but remained positive in April. 

Revised data for March were also incorporated for all index components, and the March index value remained unchanged at 107.7 – no change over the February index reading.  With this increase of 0.5 percent, the FBI has increased at a 2.6 percent annual rate since last August when the economy began to bounce back from last summer’s slowdown.  

"Trends in the index over the last several months show the franchise industry is moving in the right direction, but a full and sustained recovery will clearly be threatened if Congress does not address the important challenges facing our country which are eroding the confidence of franchise business owners. Currently, franchise business owners are facing the prospect of the largest tax increase in history on Jan. 1, 2013 with the expiration of the Bush-era tax relief," said IFA President & CEO Steve Caldeira. “We urge Congress to take actions, such as sending a signal that it has a timetable for addressing comprehensive tax reform, as soon as possible, to provide much-needed certainty in the franchise sector, which would go a long way towards improving conditions to create the jobs and economic growth our country urgently needs.” 

IHS Global Insight economist James Gillula commented that, “While some weaker economic reports recently have raised the specter of another midyear slowdown in the recovery, we have not been hit by shocks of a similar magnitude this year, and the economy's fundamentals are stronger now, which should mean continued growth for the franchise sector.”   

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  the general economic environment for franchising.   

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FBI

 

 Index, Jan 2000 = 100 ,

FBIgraph

 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 which  measures  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  multi-year grant from Jani-King International to the IFA Educational Foundation. 

*For more information about the components and the methodology, click here: 

For the International Franchise Association:              http://www.ifa.org/ 

For IHS Global Insight:                                            http://www.ihsglobalinsight.com/