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Growth Of Franchise Business Index Slows

WASHINGTON, Oct. 30, 2013 — The Franchise Business Index (FBI), an index of the economic health of the franchising industry, rose 0.2 percent in September to 110.7 (Jan 2000=100), the International Franchise Association announced today. Growth of the index slowed as the component measuring employment in franchise-intensive industries showed no monthly gain for the first time in over three years and the small business optimism index declined.

“Franchise businesses continue to create jobs and demonstrate that the franchise business model remains the best and most proven vehicle to quickly grow and scale a small business,” said IFA President & CEO Steve Caldeira. “While we are pleased the index grew for the fifth consecutive month, we remain concerned about the overall rate of growth in both new business formation and job creation. We believe comprehensive tax reform that eases the burden on small business owners by lowering the effective tax rate is essential to strong job and wage growth for all Americans.”

The other four components of the FBI all made small positive contributions to the index. The unemployment rate declined slightly and the incidence of self employment rose. Retail sales in franchise-intensive sectors increased by 0.3 percent and the index of credit conditions ticked up. After incorporating revisions to last month’s data for individual components of the index, the August value of the FBI also showed slower growth – up 0.2 percent over the July value.

Designed to provide timelier 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 Educational Foundation. The FBI combines indicators of growth in the industries where franchising is most prevalent and measures of the general economic environment for franchising.
“The franchise sector continues to exceed the modest pace of overall economic growth, as improvements in the housing market have had a positive impact on consumer spending,” said IHS Global Insight Senior Economist James Gillula, “and we do not expect higher mortgage rates to choke off the recovery.”

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