Methodology
To assess the impact of current economic conditions on franchisors’ growth prospects, BoeFly has released its third quarterly Franchise Growth Confidence Index. This latest report, conducted from Nov. 10 to Nov. 28, 2023, requested input from nearly 700 CEOs, CFOs, and CDOs representing a diverse range of industries, including automotive, pet care, education, fitness, health/beauty, home services, restaurant, and retail. Building upon data from the two previous quarterly surveys, the aim was to determine whether significant shifts in franchisor executive confidence regarding domestic growth goals occurred throughout the year. Survey participants were asked to rate their confidence levels on a scale of 1 (not confident) to 7 (completely confident) in achieving their brand’s franchise growth targets for the current year. Subsequently, they were presented with additional questions designed to address pertinent economic concerns and gauge how these factors had influenced their confidence levels since the previous quarter.
Results
Overall, just half (50%) of C-level respondents expressed varying degrees of confidence in meeting their annual growth objectives, representing a slight drop in confidence from the previous survey where 54.4% expressed confidence.
The new survey results also revealed an increasing 86.7% of respondents (up from 81.8%) shared that interest rate levels have negatively impacted their confidence level, while fewer respondents disagreed with the sentiment when compared to the previous quarterly survey.
Respondents appear to be less pessimistic when it comes to inflation having a negative impact on their growth goals, with a decrease of 13% (from 86.4% to 73.3%) between the two most recent surveys. When assessing the relationship between inflation and increases in costs associated with Item 7 of franchisors’ FDD, a clear majority (90% of respondents) agreed, suggesting that the impact of inflation, although perceived as improving, has already been priced into Item 7 of the FDD.
Lastly, a new question was added to this quarter’s survey, assessing whether the current global climate would likely impact the brand’s growth goals. In this case, only a slight majority (53.3%) agreed with this statement, which will be interesting to monitor over the next quarter.
