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Recapping the Franchise Industry in 2015

by Ed Teixeira

The year 2015 saw a number of important events take place in the franchise industry.

There were a number of things that took place in 2015, which had or will have a significant impact on the franchise industry. The impetus for these events came from a variety of sources, ranging from the industry itself to State and Federal actions. Although some of these changes will have had an immediate impact on franchising, others will linger into the future, without the long term effect yet to be known.

The following are the most important franchise related news in 2015:

  • Beginning with the city of Seattle followed by L.A. and most recently New York State, the push to increase the minimum wage and targeting franchise food systems continues to gain momentum. Supported by major labor unions, especially the S.E.I.U., look for efforts to increase minimum wages increasing with major metro areas leading the pack.
  • Judiciary actions against McDonald’s by the NLRB made a major issue out of joint employer status for franchisors. Although there are legislative efforts under the radar would derail the NLRB efforts, this doesn’t mean that claims of franchisor joint employer status won’t crop up at the state level.
  • With the exception of California, efforts to pass legislation that would provide further protections and rights for franchisees, has been unsuccessful. With Republican Governors and numerous legislatures controlling the majority of states, efforts to pass this type of legislation will be difficult. 
  • Although there will always be unscrupulous franchisors that seek to take advantage of unsuspecting individuals, continuing efforts to educate prospective franchisees on how to evaluate a franchise opportunity continue.
  • Probably the most noteworthy item taking place from within the franchise industry is the increase in the number and quality of Item 19 disclosures in the FDD. Based upon an analysis by FranchiseGrade.com and my discussions with a number of franchisor executives during the year, there is no doubt that franchisors without an Item 19 disclosure are at a competitive disadvantage. Look for this trend to continue.
  • The most popular franchise sectors based upon system growth continued to reside among QSR, Home care services, children’s services and health and fitness. Ethnic food concepts will increase in both numbers and popularity, as the U.S. becomes a more diverse county led by increases in Hispanic and Asian Americans.
  • Finally, On Friday the House passed a $1.15 trillion budget that would keep the government funded through September. The budget bill was passed by a coalition of more centrist Democrats and Republicans and might portend more progress on economy related issues. Budget stability should lessen the anxiety and reluctance of franchisors, franchisees and prospective franchisees to invest in franchise opportunities.

Although there were a number of events that impacted the franchise industry in 2015, this is my list.

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2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com

 

 

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2015 home care franchise industry report

 

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