10 Percent Of All New Jobs Were Created By Franchises Over Past Year

Yesterday, ADP and Moody’s released their inaugural National Franchise Report (NFR), a new barometer of the health and growth of the increasingly important franchise industry. The NFR measures the number of franchise jobs created on a monthly basis. It showed that 19,160 private sector franchise jobs were created in May and approximately150,000 franchise jobs were created over the past year, accounting for about 10 percent of all new jobs across the economy. Below are a few highlights from the event. Audio is available here.

National Franchise Jobs Report Highlights

According to Moody’s Chief Economist Mark Zandi, The Franchise Industry Is Responsible For 8 Million Jobs, Equivalent To The Financial Services Industry. “The franchise industry is a large industry, it’s a big part of the job base. By our calculation, based on the ADP data, it’s a little over 8 million jobs. That’s about six percent of the payroll job base. That’s about the size of the financial services industry so it’s not inconsequential. So this is a large industry, quite significant.” (Mark Zandi, Remarks At ADP NFR Launch, New York, 6/20/13) Franchise Employment Has Been Growing Nearly Twice As Fast As the Rest Of the Economy And Accounts For 10 Percent Of All New Jobs Over The Past Year, Says Zandi. “Franchise employment has been growing almost double the rate of employment more broadly. So it’s been important to the economic recovery, particularly more recently. So franchise employment is six percent of the job base, it’s about 10 percent of job growth over the past year so it’s providing more than its fair share.” (Mark Zandi, Remarks At ADP NFR Launch, New York, 6/20/13) ADP’s NFR Recognizes The Economic Power Of The Franchising Industry According To Steve Romaniello. “With the launch of ADP National Franchise Report today, ADP is showing they clearly recognize the power of franchising to the economy and the importance of promoting this very critical growth economic engine.” (Steve Romaniello, Remarks At ADP NFR Launch, New York, 6/20/13)

Zandi Points Out Key To Franchise Growth Is The Housing Recovery. “A lot of what’s driving the growth is the turnaround in the housing market and real estate more broadly. In the business service category, you do have franchises that are related to building management and providing services to the care of commercial properties and they’re doing relatively well. So the turn in housing has been obviously important to the economic recovery and the franchise industry.” (Mark Zandi, Remarks At ADP NFR Launch, New York, 6/20/13) Zandi Also Highlights That Franchises Are In All Industries. For Example, They Account For Two-Thirds Of All Auto Dealer Jobs. “Franchises are important to lots of different industries. Franchises account for about two-thirds of all jobs in the auto dealer industry. Restaurants are a big part of the story. About 40 percent of employment in the restaurant industry are in franchises. As you go down the list, you can see it is very, very important to a significant number of industries.” (Mark Zandi, Remarks At ADP NFR Launch, New York, 6/20/13) Unlike Many Industries, Franchises Are Coast-To-Coast, In Every Community Across The Country According To Zandi. “It’s important to every part of the country, coast-to-coast. If you look at some industries, they are very heavily regionally focused. In the case of franchise employment, it’s everywhere, in every community across the country so it’s important in that regard as well.” (Mark Zandi, Remarks At ADP NFR Launch, New York, 6/20/13) Romaniello Stated ADP’s Report Complements IFA Studies Which Show Franchises Produce $2.1 Trillion In Economic Output. “This new report will complement our own studies and analysis, which show that the franchise industry includes over 825,000 establishments generating $2.1 trillion in economic output. This significant economic contribution helps us make the case to policymakers that public policy should help, not hinder, franchise businesses, so that they industry can continue to grow, prosper and create millions of jobs across the country.” (Steve Romaniello, Remarks At ADP NFR Launch, New York, 6/20/13)

The Most Recent Franchise Business Outlook Forecasts Franchise Job Growth To Be 2 Percent Compared To 1.5% Of Total Job Growth. “We also expect a 1.5 percent increase in the number of franchise businesses in 2013. This will continue to outpace the growth of overall business formation across the economy. We project 1.2 percent growth for total (non-franchise as well as franchise) establishments in the 10 business lines where we track franchise performance. We expect employment in franchise establishments to increase 2.0 percent in 2013, following a 2.2 percent gain in 2012.” (“Franchise Business Economic Outlook,” IHS Global, 5/13)

Sample News Coverage

Zandi Says Franchise Industry Is A “Big Industry” With Eight Million Jobs. “You mentioned the franchise report. This is interesting, because there is no other data that covers that industry and it is a big industry. It’s about eight million jobs and about 6% of the jobs base so it’s not inconsequential.” (Mark Zandi, Fox Business News, 6/20/13) The Franchise Industry Is The “Job-Generating Gorilla In The Room.” “The franchise industry just might be the job-generating gorilla in the room. The number of franchise jobs in the U.S. grew at an annual rate of 2 percent in the last year through May, approximately twice that of overall job market, says Mark Zandi, chief economist at market-research firm Moody’s Analytics. Franchises overall provide 8 million jobs, or six percent of the job base in the U.S., according to Zandi, who spoke at the Franchise Expo in New York City this morning.” (Catherine Clifford, “Report: Franchise Jobs Grow At Twice The U.S. Rate,” Entrepreneur, 6/20/13) Is Obamacare Leading To More Jobs In Franchises? “That may sound counterintuitive to those who predict that the health reform bill will curtail growth because companies will seek to keep staff sizes below 50 full-time workers to avoid having to offer health coverage or pay penalties. But the ACA also lets businesses off the hook from having to provide insurance if their average employee works less than 30 hours a week.” (Patrick Clark, “Restaurant Franchises Are Hiring. Are They Dodging Obamacare?,” Bloomberg, 6/20/13) Restaurants Drove New Job Creation In May Amongst Franchises. “Restaurant franchises added nearly 14,000 jobs during May, payroll provider ADP and Moody’s Analytics said in their first report on employment at franchise companies. The gain was by far the largest for any of the 16 segments that the report tracked. Second was business service franchises, which includes consumer-related franchises such as travel agents. They added 2,530 jobs, followed by food retailers with 1,080.” (“Restaurants Lead Hiring At Franchise Firms In May, AP, 6/20/13)