Some Big Guys Struggle as Economy, Franchisors Expand
There are plenty of well publicized threats to franchising, including rising minimum wages in several states and cities, but unique fundamentals have the United States poised to continue its role as the globe’s healthiest economy and the destination for international investment.
Today’s latest economic news from Case-Shiller shows the National House Price Index increasing 4.4 percent over last year in May. Auto sales, a vital indicator, remain at record highs with more than 17 million new cars and trucks projects to be sold during the year. Luxury pickup trucks are even taking off again. Durable goods orders are on the rise. Foreclosure activity is at its lowest since 2007. Oil prices are still trending downward.
Yada yada yada — things are looking good. They get even better when you compare us to our peer nations around the world. America’s economy always functions at its best when we’re solidly in first place and thumping our chests, right? Well … moving on.
Many economists fear China’s stock market is having a 1929 moment—assuredly bad news for all other economies—but it bolsters our country’s position as the planet’s safest investment. Japan remains stagnant. Europe and the BRICs still can’t get a break, with no relief in sight.
Digging into our own stats, as we prepare this year’s ranking of the top 200 (plus 300) franchise systems, the top five franchisors increased their combined revenue a shade under one percent—surprisingly weak growth. Year-over-year revenue growth rates of the top five franchisors was recently stronger at 6.7 percent in 2013, 13.5 percent in ‘12 and 6.8 percent in ‘11.
Everybody knows McDonald's and Subway are in a rough patches, while 7-Eleven is growing, KFC’s sales are rising and Burger King just beat its quarterly profit estimates.
Just like the global economy, some of the big, established players are struggling, but that doesn’t overshadow the narrative that times are solidly good in the American economy and franchising world right now. Enjoy the ride.