I love data. One of my favorite business sayings is “What gets measured, gets done.” I believe that hard numbers are key to understanding whether your business is truly on a path to success, or just scraping by. Data is also key to investigating any business opportunity. So if you’re trying to determine whether franchising is right for you, I think franchise statistics are an important part of the puzzle. Here are some key numbers to illuminate the industry, along with my thoughts on what they mean for potential franchise owners.
Industry Size
The franchise statistics:
- There are more than 750,000 franchise establishments in the U.S.
- The economic output of franchises has been steadily rising since 2015.
- Franchises now produce more than $787 billion in economic output per year.
- Franchises employ roughly 8.43 million workers.
What they mean:
Franchising is neither small potatoes nor a fly-by-night proposition. This is a large, well-established industry that makes up a significant portion of our economy. In other words, when you become a franchise owner, you’re not buying into some crazy scheme. You’re becoming part of an economic model that has coherent regulation, is familiar to U.S. customers, and has proven to be successful over the long haul.
Top Sectors
The franchise statistics:
- The top three franchise sectors by economic output are quick-service restaurants ($268B), retail/automotive ($118B), and business services ($106B).
- The top three sectors by employment are business services (650,500 people), personal services (547,100 people), and food (472,950 people).
What they mean:
One of the top franchise sectors, as you probably expected, is restaurants: everything from nationwide household names such as McDonald’s and Subway to regional chains like Del Taco (West), MeltShop (Northeast), and Bojangles’ (Southeast). But personal services and business services are also very popular–in fact, although they’re behind restaurants in economic output, they employ more people. So if you want to pick a franchise sector with a large customer base and many brand choices, you don’t necessarily have to go with food service. Franchises such as salons, fitness clubs, copy centers, and staffing agencies are also solid choices.
Franchise Diversity
The franchise statistics:
- Franchising covers 29 industries and 226 sub-sectors.
- Almost two-thirds of franchises are non-food-related brands.
- Eighty-four percent of franchise concepts are local or regional brands.
What they mean:
When it comes to franchising, you have more options than you realize. First and foremost, you don’t have to buy a restaurant: about 63% of franchises have nothing to do with food. You have 226 sub-sectors to choose from, including brick-and-mortar and home-based options! If you can think of the business concept, there’s probably a franchise for it. In addition, franchising doesn’t have to mean buying into a faceless mega-corporation. The vast majority of brands are local or regional, offering a more personal touch and culture. Overall, the diversity of the industry means that just about anyone can find something that fits their skills, personality, and interests.
Franchise Investment
The franchise statistics:
- Just over 50% of franchises are controlled by multi-unit operators.
- Just under 50% of franchises require a startup investment of less than $250,000, and many options require less than $50,000.
What they mean:
Franchising isn’t just for the rich: plenty of options require a startup investment of less than $100,000, or even less than $50,000. In addition, many franchisors provide significant support in the form of financing options, cost-sharing, or corporate-level marketing. The Small Business Administration also makes low-cost startup loans to franchisees. In other words, franchising is squarely within reach for many middle-class families. And with many franchises owned by multi-unit operators, franchising can be a strong path to professional and financial growth.
If you’re a “Show me the numbers” type, I hope this post has been helpful. I’m just a phone call away if you want more data, or if you want to talk about the more abstract elements of franchising. Let’s figure it out together!
Sources: Statista and VettedOpps.
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