About Franchising

Franchising is a method of distributing goods or services to consumers. The franchising company owns the rights to the trademarks of a business. The franchisee purchases the right to use the trademarks and operating system.

Most people associate the word “franchise” with fast food restaurants. But, there are more than 300 different business lines that use franchising as a means to distribute goods and service: everything from child education to maintenance services, pet care to senior in-home care and many more.

Franchise Facts: from the International Franchise Association (IFA)

• Franchise businesses account for nearly 40.9% of all retail sales in the United States.
• Franchise businesses provides for more than 9 Million jobs.
• There are an estimated 6,000 franchise companies operating in the U.S. doing business through close to 825,000 franchised businesses, creating over $2.1 trillion in revenue each year.
• One out of every 12 business is a franchised business.
• A new franchised business is opened every 8 minutes each business day.

Success Statistics:

• According to the U.S. Commerce Department fewer than 5% of Franchises were terminated on an annual basis
• In a study by Arthur Anderson & Company of 366 franchise companies, nearly 97% were still in business after 5 years.
• In contrast, a study by the U.S. Small Business Administration revealed that 62.2% of all new businesses failed within their first 6 years of business.

Employment:

• The total number of people employed by a franchise is approaching 9 Million, with 8 to 14 employed per business.
• Franchised businesses create more than 170,000 new jobs each year.

The Future of Franchising

Within the next 10 years, franchising will comprise over 50% of the retail economy and employ millions of people. This growth should be anticipated based on the simple logic of the underlying concept. Franchising offers success to aspiring, new business owners with the least amount of risk. These systems will enable hundreds of thousands of new business owners to realize the dream of successful business ownership and financial independence.

Like the US and world economies, franchising is evolving. There will be even greater opportunities for wealth creation among both franchisees and franchisors as this evolution progresses. New franchises will be developed while the existing systems become more fortified and continue to grow. If you are ready to take the next step and go into business for yourself or if you have an existing business that you want to optimize, then you should look closely at franchising as the vehicle to take you to where you want to be in the 21st century.

Review a PDF  “Intro to Franchising” Guide from the IFA.