The International Franchise Association recently released the report from its 2024 Annual Franchisee Survey. The survey, conducted by FRANdata, provides a detailed analysis of the economic conditions on franchised businesses and surveyed over 1,400 franchisees nationwide.
The report found that the food industry has been the hardest hit by inflation, with 90% of sit-down restaurants and 63% of QSRs experiencing a substantial impact from inflation.
While the percentage pretty much remained the same for QSRs from 2023 (65%), sit-down restaurants saw a huge increase in the effects of inflation from 2023 where only about half (53%) reported significant impacts.
Most QSR/full-service restaurant franchisees (81%) also reported trouble with labor challenges.
The same group also came in second for franchisees struggling with scheduling (32%). As a whole, the franchise industry named increased wages as the top factor contributing to labor challenges.
To help deal with these economic challenges, franchisees look to franchisors for support them in these top five ways:
- Information sharing across system to inform decision making to include best practices (61%)
- Increased/improved advertising to drive demand (47%)
- Help with government officials and/or mandates and regulations (25%)
- Help with employee recruitment (24%)
- Help manage supply chain disruptions (19%)
Another challenge felt by the franchise industry as a whole is the need to raise prices due to cost increases and experiencing lowered business earnings. 86% of franchisees raised their prices to combat cost increases, while 80% of franchisees experienced lower earnings. In fact, 25% of respondents named managing costs and inflation as their most significant business challenge in 2024.
QSRs clocked in at second (95%) for the top five industries increasing prices for goods and services to help manage price increases as well as for the top five industries witnessing lower business earnings.
Click here to view the International Franchise Association's full report.
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