Additional IFA Analyses
The International Franchise Association is dedicated to providing insightful analysis into the franchise sector. Below is additional research conducted on behalf of IFA:
When the employer mandates are phased in 2014, many franchise businesses will be motivated to reduce the number of locations and move workers from full-time to part-time status. This will reduce employment and curtail the country’s economic growth. We estimate that more than 3.2 million full-time employees in franchise businesses would be affected. Industries that have traditionally offered the greatest opportunities to entry-level workers — leisure and hospitality, restaurants — will be particularly hard-hit by the new law.
This report concludes that requiring employers to offer health insurance raises the cost of employment, and discourages hiring. Employers should not be required to offer workers health insurance, just as they are not required to offer auto and home insurance as part of a compensation package. Franchise businesses, which employ substantial numbers of low-skill workers, will suffer the most distortions due to the new employer mandate. Entrepreneurs will be discouraged from expanding their businesses by opening additional locations or acquiring others, thus reducing the rate of growth and job creation the country so desperately needs.
The report answers two key questions – What percent of franchised businesses are owned by a minority group member, by females, and equally-owned (male/female)? What percent of minority owned, female-owned, and equally-owned businesses are franchised? In addition, the report provides information about minority and female ownership rates in the food services and drinking places industry, which includes a large concentration of franchised businesses. The report also provides information about ownership rates by size of business.
The new report shows that the minority ownership rate for franchised businesses increased by 1.2 percentage points from 19.3 percent in 2002 to 20.5 percent in 2007, an increase of 6.2 percent. In 2007, 20.5% of franchised businesses were owned by minorities, compared to 14.2% of non-franchised businesses. Female ownership among franchised businesses declined from 25% in 2002 to 20.5% in 2007, a decrease of 18%. However, during this same time period, the share of franchise businesses that were equally male/female owned increased from 17.1% in 2002 to 24.4% in 2007, or an increase of 42.7%.
On behalf of the IFA Educational Foundation, PwC estimates that there were 66,275 veteran-owned franchised businesses in the United States in 2007. Veteran-owned franchises account for 13.4 percent of all franchised businesses. These firms provided nearly 815,000 full-time and part-time jobs and paid out $24.2 billion in labor income (including wages and salaries, benefits, and proprietors’ income). Veteran-owned franchises had annual business receipts of $139.3 billion and directly accounted for $41.6 billion of GDP in 2007. Including the direct, indirect, and induced impacts, veteran-owned franchises supported more than 1.5 million full-time and part-time jobs in 2007, or about 1.0 percent of all nonfarm private sector jobs in the U.S. economy. Veteran-owned franchises directly or indirectly provided $59.1 billion in labor income and generated $100.7 billion in GDP in 2007, or about 0.8 percent of the total national nonfarm private sector GDP.