Summary:
Franchising thrives in Georgia, particularly in Atlanta.
Kelly Loeffler's leadership could propel national growth in the franchising sector.
Over 60% of franchises operate outside the food industry.
More than 26% of franchises are owned by people of color, showcasing diversity.
The franchising sector grew at 4% in 2023, outperforming the broader economy.
The Franchising Phenomenon in Georgia
As Georgia goes, so goes the nation. This phrase resonates not just in college football but also in the thriving franchising business model that has flourished in the Southeastern United States, particularly in the Peach State. With former U.S. Senator Kelly Loeffler set to lead the Small Business Administration (SBA), the franchising sector is poised for substantial growth with the right policy changes.
Understanding Franchising
Franchising is a business model where a franchisor grants a franchisee the rights to operate under its established brand and business system. In return, the franchisee pays an initial fee and ongoing royalties, effectively owning and managing their own business.
The Franchising Capital
Drive down any street in Georgia, and you're likely to encounter a franchise. Atlanta is home to more franchising brands than any other U.S. city, earning it the title of franchising capital of the United States. Iconic brands like Chick-Fil-A and Sonic originated here, alongside newer franchises such as Floor Coverings International and Any Lab Test Now.
A Diverse Industry
While often associated with food, over 60% of franchises operate in various sectors, including hospitality. For instance, IHG Hotels, based in Atlanta, provides reliable lodging across the nation. Notably, 81.6% of franchise owners operate just one location, dispelling the myth that franchising is solely for big corporations.
Empowering Entrepreneurs
Franchising stands out as a pathway to entrepreneurship, especially for underrepresented communities. Approximately 26% of franchises are owned by people of color, with Black-owned franchises earning 2.2 times more than their independent counterparts.
Resilience During the Pandemic
The franchising sector has shown remarkable resilience, growing at 4% in 2023, nearly double the 2% growth of the broader economy. Georgia ranked third in the nation for franchise growth in 2024 and is expected to lead in 2025.
The Role of the SBA
These developments present an opportunity for Loeffler, should she be confirmed as the next SBA administrator. The SBA plays a critical role in providing financial capital to franchisees, with nearly 20% of its loans going to franchises. However, the recent elimination of the franchise directory has posed challenges for many brands seeking financing.
A Call for Action
To support small business growth, reinstating the franchise directory is essential. Such steps would create a conducive environment for franchise growth, allowing entrepreneurs from all backgrounds to thrive.
Matt Haller is the president and chief executive of the International Franchise Association.
Comments