Feb 26, 2020 - Blog, Franchise Articles by |

In January 2020, Franchise Direct published two articles, A Look at How Franchises Impact the Economy and Franchising by the Numbers, that provide a nice overview of the current state of the franchise industry. Here, franchise attorney Jeffrey M. Goldstein covers some of the highlights:

1. There are More than 750,000 Franchises in the U.S. with More than 8 Million Employees

According to Franchise Direct, as of January 2020, “[i]n the United States, over 750,000 franchise establishments are operating and employ around 8.17 million people.” Franchise Direct also reports that another 13.3 million jobs are “supported by franchises.” Citing the most-recent economic data, Franchise Direct reports that gross revenue from franchisees topped $868 billion in 2016, compared with $675 billion a decade earlier.

2. Food Continues to Dominate the Franchise Industry

Across all sectors, food establishments accounted for the most employment in franchising, providing just under 473,000 jobs across the country. Based on global sales data, the three most-successful U.S.-based franchises are McDonalds, 7-Eleven, and KFC.

3. Franchise Ownership Demographics are Shifting

It used to be that the majority of franchise owners were middle-aged or older, and typically seeking to transition out of an unfulfilling job or use their career experience to build their own business. While this is still the case today, Franchise Direct reports that 12 percent of franchisees are now 34 years of age or younger, and more than half of franchisees (54 percent) own two or more outlets.

4.  Franchising is Expected to Continue Its Upward Trend

Franchise Direct reports that, “[c]urrent trends and the future forecast for franchises predicts greater expansion. Many more independent businesses are deciding to franchise in the United States, and existing American franchises are beginning to expand internationally. The franchise business model for most companies now includes a greater level of support for franchisees, and this support leads to higher levels of success, revenue, and more expansion.” This last point might be open to debate; but, regardless, it is clear that the franchise model isn’t going anywhere any time soon.

5. In Particular, Expect to See Growth in the Fitness, Children’s and Home-Based Sectors

The three industry sectors poised to see the most growth in the near term are fitness, home-based and children’s activity franchises. According to Franchise Direct, “[p]arents and adult caregivers are spending record numbers on extracurricular activities for their children. The market is ripe for franchises that offer educational services, music lessons, dance lessons, and sports activities.”

6. Franchises Account for Nearly Six Percent of the U.S. GDP

Citing data from the International Franchise Association, Franchise Direct reports that franchises account for 5.8 percent of the U.S. gross domestic product (GDP), with a total economic output of approximately $1.6 trillion.

Are You Thinking about Buying a Franchise?

Are you thinking about buying a franchise in 2020? If so, we encourage you to contact us to learn more about our flat-fee franchise business review services. To speak with franchise attorney Jeffrey M. Goldstein for free, call 202-293-3947 or inquire online today.

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