New research shows 84% of franchise companies report revenues are now equal to or higher than pre-pandemic levels
February 2, 2022 – Portsmouth, NH – Franchise Business Review today announced the release of its 2022 Franchising Outlook Report. The Portsmouth, NH-based research firm has been tracking satisfaction and performance across the franchise sector for over 17 years.
The data released by Franchise Business Review shows that both franchisors and franchisees are overwhelmingly positive about growth of the franchise economy in 2022, with 70% of franchisees and 84% of franchisors rating their opportunity for growth as strong or very strong. The report is based on research from over 31,000 franchise owners across 350 brands, 6,000 employees at both the corporate office and unit-level, and 200 franchise executives. Other key findings include:
- 84% of franchise companies report revenues are now equal to or higher than pre-pandemic levels with 51% of companies reporting revenues increases of 20% or more compared to 2019.
- Nearly half (46%) of franchise executives reported that the pandemic had POSITIVE impacts on their businesses.
- Franchisors reported average net operating margins of 17%, and over a third of franchise companies (35%) reported profit margins of 20% or higher.
- Over half (53%) of franchisors project total revenues to grow by 15% or more in 2022, with 36% projecting more significant revenue growth of 20% or more.
Franchisees are also optimistic, reporting strong incomes and record-high levels of satisfaction. Key findings include:
- The average annual income is currently $107,119, with the average for franchise business owners beyond the “startup period” (considered the first two years in business) reported as $118,792.
- 88% say they enjoy operating their business
- 86% enjoy being part of their franchise organizations
- 70% reported feeling very positive about the growth opportunities ahead.
“The potential annual income that a franchise owner can earn is an important metric, but there are many factors that come into play,” said Eric Stites, founder and CEO of Franchise Business Review. “Unlike employees, business owners build equity in their businesses. It’s important to look at the whole investment, and have a good understanding of the long-term value of a business, as well as the annual cash flow it may produce over time. Much of the wealth that many business owners ultimately realize comes in the form of equity, which they cash out when they sell the business.”
Although the outlook for franchising is bright, the data also revealed potential areas of concern. Not surprisingly, franchisors identified labor issues as a top concern for the future, with 60% of franchise executives reporting that recruiting and retaining quality employees limited their growth last year. In our 2021 Franchising@WORK report, Franchise Business Review discovered that the number of corporate franchise employees with 7+ years of tenure had dropped by 55% across all sectors. Other challenges that pose significant risks to franchise businesses over the next three years are government regulation (57% of franchisors) and supply chain issues (49% of franchisors).
“While franchising as a whole has emerged stronger, it’s important to recognize it wasn’t without casualties,” said Stites. “Some of the hardest-hit sectors – table/full-service restaurants, personal services (i.e. fitness, massage, hair care, etc.), mall-based retail, hotels, and travel services – lost millions in revenue and shuttered thousands of locations. Many of those sectors are now recovering, and franchise companies, unlike most small, independent businesses, have the resources and corporate staff to innovate faster, and better support their local franchise operators through disruptions.”
The full report and the presentation of the key takeaways is available at: https://fbrinfo.franchisebusinessreview.com/franchise-outlook-report
Research is now underway for Franchise Business Review’s franchisee satisfaction awards and Franchising@WORK employee engagement awards. Franchisors who are interested in participating in Franchise Business Review’s research should visit: GoFBR.com.
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About Franchise Business Review
Franchise Business Review (FBR) is an independent market research firm specializing in benchmarking franchisee satisfaction and employee engagement in the franchise sector. FBR works with franchise brands across North America to conduct satisfaction research with their franchisees and employees to help entrepreneurs make informed buying decisions, support franchise business owners, and drive growth for franchise brands. Each year FBR researches the top franchise brands and publishes free and unbiased franchisee satisfaction and employee engagement research reports. Since 2005, FBR has surveyed hundreds of thousands of franchise owners and over 1,200 leading franchise companies. To read our publications, visit https://franchisebusinessreview.com/page/publications/.
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