Franchise Lawyer Blog

It’s All About Employment

The Washington Post reports that employers have added the fewest jobs in eight months and that the unemployment rate has jumped to 9.1%. The stock market swoons in response, because this finding stokes fears that the economic recovery is losing momentum.

But how much momentum was there ever in the hiring area? As macroeconomic measurements and the stock market have moved upward, unemployment has remained a steady and nagging concern. Now it has become more than a nagging concern. Slow growth in sales and doubts about the future are causing employers to hold off on hiring new personnel. As the Post points out, this has caused a crisis in confidence that has stalled job growth. Hiring is, after all, an investment in the future.

How does this affect franchising? There is a silver lining theory, which we have written about before, that rising unemployment draws a greater interest in the opportunities franchising offers, but there are doubts about that theory in the face of a steady unemployment crisis. The problem is that franchisees are not hiring either. As small business owners, they are among the first to feel the effects of slow growth and among the first to suspend their plans for new hiring. And as economic growth slows, franchisors move more slowly into new areas and markets, if doing so involves a capital outlay. Against this downward trend is the theory that people have to work and will find opportunities in franchising new business concepts that do not exist in the conventional job market. We can only hope, the jury is still out on that.

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