Why the Franchise Industry is Outpacing the U.S. EconomyNovember 9, 2018
The franchise industry is a powerful economic engine. Take a look at the growth the industry is experiencing, according to the Franchise Business Economic Outlook for 2018[i], published by the International Franchise Association:
- Franchise establishments are expected to have grown to 759,000, an increase of 1.9 percent over 2017
- Franchise employment is anticipated to have increased by 3.7 percent, outperforming the rest of the U.S. economy
- The gross domestic product (GDP) generated by the franchise industry is predicted to beat U.S. GDP growth by 6.1 percent, or $451 billion
- The industry will contribute about 3 percent of the nation’s GDP in nominal dollars
- Output by franchise businesses is anticipated to have increased by 6.2 percent to $757 billion
The IFA forecasts steady industry growth for 2019 and 2020, too.
Among the franchise industry segments to fare very well by the time 2018 comes to a close is the personal services franchise segment. Personal services, which include home health care concepts, are anticipated to finish 2018 the strongest in terms of number of establishments and employment. Establishments for personal services will have grown 3 percent and employment will have increased 5 percent over 2017. The economic output by personal services franchises is predicted to amount to $37.8 billion, an increase of 7 percent over 2017’s output.
Why the Franchise Industry Excels
Thanks to tax reform, deregulation and growing consumer confidence, the franchising industry is booming – and outpacing the rest of the U.S. economy.
Franchises are benefiting from reduced corporate tax rates. Franchisors can now increase small business investments, which prompts growth. With permanent tax cuts and scaled back regulations, businesses should have an easier time creating continued growth. But the tax cuts aren’t just benefitting franchise companies; consumers are also getting a bump in their paychecks thanks to the cuts, and consumer spending is high[ii].
However, regardless of the economy, the franchise model remains strong. It consists of the franchisor – a company or person who grants a license to another company or person to conduct business using the franchisor’s product or service, trademark and name – and the franchisee, the party that receives the license. The franchisor typically receives a franchise fee and a royalty based on a percentage of the franchisee’s sales. In return, franchisees typically receive support in the way of opening help, training, marketing, operating systems and more. Plus, franchisees operate a business with brand name recognition.
Home Health Care a Leading Franchise Opportunity
The home health care industry is one of the most successful segments within the franchise industry.
Thanks to the large and aging baby boomer generation that wants to age at home, there’s an increasing demand for home health care. Baby boomers are the largest living adult generation with 72 million to 74 million people in the United States.[iii] Demand will remain strong for years to come as lifespans increase and the following generation, Generation X, is predicted to become the largest living adult generation in 2028.
That means there will be a constant demand for companion care, personal care and skilled medical care, for which BrightStar Care provides as a full continuum. BrightStar Care franchisees can also take advantage of providing medical staffing for healthcare organizations as an additional revenue channel when growing their home health care agency. Hospitals, nursing homes and assisted living communities regularly need help sourcing high-quality talent, and franchise owners are able to capitalize on this opportunity.
Younger family members are already feeling pressure to care for their baby boomer parents and grandparents, and these family members are attempting to provide the care themselves. But, many of these well-intentioned children and grandchildren will not be able to handle the stress that goes along with attending to someone who needs increasing amounts of help, including skilled medical care for an extended period of time. At some point, many family members providing care to their loved ones will join others who have turned to outside home health care businesses to assist with the care of their aging loved ones.
When you combine the robust franchise industry with home health care, for which there will be strong demand for years to come, you have a recipe for success.
Are you interested in meeting the growing demand for home health care services by opening a home health care business of your own? Learn about franchise opportunities with BrightStar Care by downloading our free franchise review today.