Franchise Facts
Franchising Continues To Break New Records In Sales, Employment and the Number of Establishments
Subway, 7-Eleven, McDonald’s, Radio Shack. What do all of these businesses have in common? They’ve all used business format franchising as a means for expansion and now have thousands of domestic and international restaurants, stores and unit franchises.
Since gaining popularity in the 1960s, franchising has been employed by more than a thousand North American businesses as a means of business expansion.
Franchising is responsible for 760,000 businesses, 18 million jobs, 14% of the private sector employment, and over $500 billion in payroll.
Source: 2004 study by the International Franchise Association
More than 300 franchises are sold every week in North America, which translates into one franchise business opening every 8 minutes in a typical business week.
Franchising is the one distribution system that emphasizes individual ownership, the foundation of any free economy.
90% of franchises are still in operation after 10 years, compared to just 18% for other forms of small business.
Source: The U.S. Department of Commerce
More Franchise Facts
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Franchising accounts for almost 50% of all retail business in North America
There are an estimated 1,500 franchise companies operating in North America doing business through more than 760,000 retail units.
120 industries use franchising to distribute goods and services to consumers.
Average initial investment level for nearly 8 out of 10 franchises, excluding real estate, is less than $250,000.
Average royalty fees range from 3% to 6% of monthly gross sales.
Franchising as a whole has a 92% success rate for franchisees. This is compared to 30 to 35 percent of small businesses which fail within the first year of operation. Source: US Small Business Administration
For franchisees who own multiple units, the rate goes up to 97%.
44% of the North American workforce said they are considering self-employment – a percentage almost four times higher than the number of people who are actually self-employed in the U.S. (12%)
Source: March 2005 study by the world’s largest career transition firm