Franchises seeing bright light at the end of the tunnel

Jessica SarterFranchise Finance

Since 2007, most of the market has been struggling to recover from a marked economic downturn, but results from a recent International Franchise Association (IFA) study show that franchise financing and the industry as a whole may finally be out of the woods.

“The outlook is for continued moderate growth,” said Federal Reserve Bank of San Francisco president John Williams in an interview with the Associated Press. The AP surveyed 32 top U.S. economists earlier this month who all stated that, while it may not be progressing quickly, the market is definitely on the turn-around. Hiring is expected to stay at roughly the same level between now and November, as are manufacturing and corporate progress.

The IFA is finding similar results for franchise loans in its most recent research. Its Franchise Business Index reflected a 0.5 percent increase in franchise strength from last month, with a 1.8 percent increase from last year this time. Overall, that still puts the franchise sector about 5 percent lower than pre-recession figures, but the trend has remained positive since April 2011. If you’re looking to take advantage of more favorable franchise lending conditions, an online marketplace like Boefly can help your application reach a variety of lenders in one easy step.

“While some weaker economic reports recently have raised the specter of another midyear slowdown in the recovery, we have not been hit by shocks of a similar magnitude this year,” said economist James Gillula of Global Insight. “The economy’s fundamentals are stronger now, which should mean continued growth for the franchise sector.”

According to the Franchise Lending Index, a joint effort between Boefly and the International Franchise Association, credit access for franchise loans is still increasing even if approval rates have suffered just slightly. Businesses are optimistic for improvement in the future.