Franchisees are flocking to South Carolina. The International Franchise Association (IFA) anticipates the Palmetto State’s portfolio of franchise-owned establishments will grow to 12,608 by the end of the year, a 2.4 percent increase compared with 12,317 in 2016.
That rate puts the state in a three-way tie with Colorado and Florida for the fourth-highest franchise growth rate in the country behind Arizona (3 percent), Utah (2.9 percent), and Nevada (2.8 percent), according to the IFA.
In neighboring states — North Carolina and Georgia — franchise growth in terms of establishments is expected to increase by 2.2 percent and 2.1 percent, respectively.
Industry experts said the Upstate is a magnet for franchise development in the state, which could mean hundreds, if not thousands, of new jobs and millions of dollars of economic impact for the region.
“The Carolinas in general are big franchise states,” said Mike Hall, owner and president of Franchise Resource Group, a franchise sales and consulting firm with offices in Charleston, and Charlotte and Raleigh, N.C.
“What you’ve got is a lot of post-recession movement to the South. The Upstate and coastal areas [of South Carolina] in particular are very attractive. Companies are hiring; younger people are moving in. There’s a lot happening.”
Founded in 1960, the IFA said it is the world’s largest advocate for the franchise industry, representing companies in more than 300 business categories, individual franchises, and other companies that support the industry.
A forecast study released by the Washington, D.C.-based association earlier this year did not include specific data for the metropolitan areas of South Carolina, but the study said the state franchise industry’s growth is expected to increase 4 percent to 135,300 jobs this year.
According to the Bureau of Labor Statistics’ most recent numbers, employment in the state stood at more than 2.32 million jobs in May. Based on those numbers, franchise ventures employ about 6 percent of the state’s workforce.
IFA numbers showed the state’s payroll tied to franchise businesses is expected to increase 4 percent to $4 billion during the year. The economic output from those businesses will increase almost 6 percent to $10.8 billion.
Hall said the distribution of franchises in South Carolina by industry is similar to national numbers, which as of January showed quick-service restaurants dominating the landscape with about 26 percent of the total sum, according to the IFA.
Personal services franchises comprised about 15 percent of the total, followed by business services (14 percent), commercial and residential services (9 percent), retail products and services (8 percent), real estate (8 percent), retail food (7 percent), automotive (5 percent), full-service restaurants (4 percent), and lodging (4 percent).
The quick-service restaurant sector also had the lion’s share of employment at 46 percent, according to the IFA.
Hall said in addition to restaurants and food-related enterprises, businesses catering to the leisure and travel industry are becoming more present in South Carolina, particularly along the coast.
In the Upstate, personal services businesses spanning education, senior care, in-home care, home services, financial services, printing, staffing, signage, automotive care, car dealerships, tech-related businesses, and auto parts retailers are booming, he said.
Hall said the tough years of the recession had a positive impact on franchise growth in South Carolina.
“We put a lot of people into franchises during the recession,” he said. “The reason is we had so many people that were mid- to senior-level professionals transitioning.”
He added, “Say for instance you found yourself after many years without a job. You have a decision to make: Do I go back to corporate America, or do I finally break away and start my own business? A franchise is a very popular way to go because you have the support of a larger corporation.”
Hall said he worked with one “candidate” who had decided to leave Michigan and wanted to open a business in Atlanta or Charlotte.
“I told him, ‘You ought to stop in Greenville. I think you’ll be very impressed,’” he said. “He stopped there and decided not to leave.”
Hall said prospective franchisees don’t necessarily need to have a bevy of knowledge related to the concept they wish to pursue.
“It’s something I run into a lot and can be an obstacle for people,” he said. “In the corporate world, you acquire a lot of skills. Some you don’t realize you have. There are certain skills you need.”
“One of the primary skills is people management. Whether you’re at a large company or a franchise owner, if you can’t find the right people and manage them to move the organization forward, you’re going to struggle,” Hall said. “Franchises already have the ideas that work. That’s what we like about them.”
Matt Kelton, chief operating officer for Showhomes, a home-staging franchise based in Nashville, Tenn., said his company is looking to expand its footprint in the Carolinas and is eyeing Greenville County.
Kelton said the company, founded in 1986, has 60 locations in 22 states. Its CEO, Bert Lyles, is originally of Spartanburg.
“We like the Upstate,” Kelton said. “We have a specific market: the top 20 percent in home value, which is typically $800,000 and up. Upscale luxury homes. We look at density, but we also look at economic growth. … The economy is doing well. There are new people moving to the area.”
Sharon Peterson, director of franchise sales for Best In Class Education Center, a tutoring business that specializes in working with K-12 students, said her company is working with a few prospects in South Carolina.
The Seattle-based business, founded in 1995, currently has 49 locations in nine states.
“South Carolina has a fantastic economy,” Peterson said. “We look at demographics, the economy, and the growth of an area. Is there a growing population of younger demographic? Are more people moving in than leaving? We are seeing that specifically in the Upstate.”
She said the company is particularly interested in Spartanburg County because of its seven colleges.
“We have a pretty diverse group of franchisees,” Peterson said. “Some of our franchisees are teachers. The majority of our system is comprised of individuals with a managerial background. … They are looking for something they can build as a family. We provide an extensive support program.”
Aaron Davis, originally of Greenville, is the owner and operator of 17 Little Caesars Pizza restaurants spread out across the Upstate. Davis recently opened his first location in Boiling Springs for the fitness franchise Workout Anytime. He said he is already planning to open a second location in Spartanburg County.
“There is a lot of growth in the Upstate,” Davis said. “Most people are coming here because they like the climate. It’s near the beach, near the lakes and mountains. It’s a perfect scenario for what attracts young families and people from outside to an area.”
Davis added, “On the business side, the demographics are very strong. The market rates for commercial leasing are low compared with Atlanta or Charlotte. It’s affordable for business. People here are very friendly and loyal. “
Davis, who started working at Little Caesars at age 15, said he now employs about 400 people.
He offered a few words of wisdom for prospective franchisees.
“You really have to study the franchise, study the model,” Davis said. “Make sure you have a strong connection to a corporate team and have a good support system. [Franchises] are proven models, and most of the time they’re going to work, but operations is up to you.”
According to the IFA, the number of franchise establishments is expected climb to 744,400 in the U.S. by the end of 2017, a 1.6 percent increase compared with 2016.
Employment in the nation’s franchise industry is anticipated to grow 3.3 percent to 7.9 million people by the end of the year, the association said.
The economic output from franchise businesses will increase 5.3 percent to $710 billion. In terms of gross domestic product, the industry is expected to generate $426 billion in 2017, a 5.2 percent increase compared with the previous year, according to the IFA.
