Employment Data Bodes Well for Franchise Development – Fewer Applicants Coming From Full Time Jobs
By: Michael Alston for Franchise Insights
April 10, 2024 – Franchise developers have been swimming upstream against a tide of employers clinging to full-time workers since the post-pandemic return to work. Over the last year, fewer aspiring franchise owners were leaving full-time jobs. In our March 2024 Small Business Startup Sentiment survey, franchise seekers who say they are leaving full-time jobs reached a four year low at 36.9%, as U.S. employers shed full-time workers.
The percentage coming from full-time jobs was 61.2% in February 2020 before the pandemic ensued, and it returned to 58.6% in October 2021 as vaccines became widely available. The above chart shows the current employment status reported by prospect survey respondents indexed to January 2020, with full-timers shown by the green shaded area.
There were a few other peaks, in November 2022 and March 2023, at 58.1% and 57.4% respectively, but the full-time employment share has been on a downward trend since then.
Franchise seekers who say they are leaving full-time jobs reaches a four year low in March 2023 at 36.9%
On the other hand, individuals researching franchises are increasingly coming from freelance, consulting and part time jobs, represented by the dark blue and light blue lines in the above graph. While there is seasonality and variation, especially in the part-time share, the combined “non-full-time” cohorts are clearly increasing.
Further, the share who say they already own a business (red line above) grew to 18.4%, below the record 25.5% in August 2021, but the highest in eleven months.
Franchise searchers are increasingly coming from freelance, consulting and part time jobs, and 18.4% say they already own some type of business.
We don’t know why this is occurring, but one can postulate that it is related to the decreasing employment rate of adults 25-54 years reported by the St. Louis Federal Reserve over the same period. In addition, employers are cutting jobs in the last several months, and cut over 90,000 jobs in March alone, up from almost 85,000 in February, according to global outplacement firm Challenger, Gray & Christmas.
So while the employment rate remains low, and the April 5 jobs report showed and unexpected gain of over 300,000 jobs, many of these were part time jobs. A more in-depth look at the full/part-time shift may be found here.
This observation may be related to the drive for the imposition of “return to work” and more traditional office hours, as business-buyer prospects consistently report a desire to “be their own boss” and flexibility in hours and working conditions. Also, 42.7% of survey respondents report that the pandemic “boosted their desire to control their own destiny through business ownership.”
The Small Business Startup Sentiment Index™ is based on a monthly survey of individuals who have recently inquired about businesses or franchises for sale
FranchiseInsights.com compiles monthly the Small Business Startup Sentiment Index™ (SSI) of individuals who have recently inquired about businesses for sale on the FranchiseVentures lead generation platform. The most recent Startup Sentiment Index™ survey was conducted March 21-30, 2024.
Download a copy of the latest FranchiseInsights.com Small Business Startup Sentiment report here. See excerpts from prior SSI™ surveys and subscribe to receive the Small Business Startup Sentiment Index™ monthly report when it is released.
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Published on Wednesday, April 10th, 2024.