By Jerry Wilkerson ©

The U.S. franchise business economy will grow at its fastest pace since the 90s boom, according to our survey of 100 top franchise executives in America.  In their most optimistic outlook in years, franchisors predict a firm seven percent growth in development of new units across the nation for 2004.   According to the 13th Annual Franchise Business Development Forecast and Industry Trends Analysis conducted exclusively by Franchise Recruiters Ltd., an international executive search corporation, branded systems that have been playing defense are now thinking affirmatively about the economy. 
 
 The chorus is building, and it is packed with many sturdy franchise leaders, national business corporate officers, people who make things happen.  With rare unanimity, franchisors forecast that this "Silver Lining Economy" may never be in a better position for sustained growth than this year.  Franchise development is tracking momentum, and it will be sustained, say franchisors, into 2005.  This growth, however, will not be a rapid leap to robust financial health.  Franchisors declare this will be a year of gradual improvement of existing store sales along with new unit development.  The gloomy years are behind us, franchise officers articulate, and vigilant deliberation on business plans is absolute.  "Not making a decision is sometimes the most detrimental choice a franchisor can make.  It's time to face the facts with short and long range plans," said one corporate officer.  Otherwise, with this economy, decisions will be made for you.

 As franchisors respond to the ever-changing demands of the consumer, real estate costs continue to rise while finding good locations remains a challenge for most systems.  The merits of buying versus leasing are forcing some chains to employ real estate departments and construction managers.  With interest rates at a 45 year low, real estate ownership becomes a key ingredient in the expansion mix.  Service franchisors still look at models that allow for "at home management" or "off the alley" sites but which do not require a storefront business exposure.  More and more brands are setting up ways to move the office to the "back of the lot," eliminating the need to maintain customer eyewash exposure.  When concern for traffic activity, visibility, and accessibility is not critical, operation cost goes down.  A franchisor needing to lease would be smart to push for a long term, fixed rate agreement with three to five year renewal options.