Credit access and health care reform raising concern among franchise executives: a new IFA survey shows franchise executives are taking a less optimistic view about current and future business conditions.

Author:Reynolds, John

Franchise executives are taking a less optimistic view of their own business prospects and the U.S. economy due to continued concerns about access to credit and new concerns about the negative effect of the health care law and regulations on their businesses. A survey conducted in mid-August of 149 International Franchise Association members, including both franchisors and franchisees, shows mounting concerns and less optimism for the months ahead.

Access to Credit

Among the major concerns, nearly two-thirds (64 percent) of those surveyed, reported "no improvement in credit access" in recent months. In a March 2011 survey, 60.9 percent reported "no improvement in credit access."

These executives have also lowered their expectations about any improvement in credit access over the next 12 months. In the March survey, nearly half (48.8 percent) said they expected to see "moderate improvement" in the months ahead, which has dropped to only 27.3 percent who now say they expect to see "moderate improvement" in the months ahead.

Health Care Law

The impending impact of the health care law is weighing on franchise executives and their business outlook. Four out of five executives (81.3 percent) have a "negative" or "very negative" view of health care reform and nearly four out of five (79.1 percent) believe their business costs will increase "significantly" or "very significantly." Less than five percent (4.5 percent) of the executives surveyed had a "positive view," only 0.7 percent had a "very positive view," and 10.4 percent were "neutral." About five percent of those surveyed believe their cost will "decrease" or "significantly decrease."

Concerns about the health care law have raised the level of uncertainty among franchise executives.

Three out of four respondents said, "it has created some uncertainty in our long-term business planning" to "we are no longer confident that our business model is profitable." Of those who said it has not affected their long-term business planning, 15.8 percent said, "it has had no effects on planning for my business" and 6 percent said, "we have changed our plans for providing s% employer-sponsored health care, but it has not affected any other areas of our business planning."

These concerns have caused franchise executives to take a less optimistic view about current and future business conditions. Based on the survey, business leaders see the current business conditions as worse than earlier in the year...

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