The franchise industry is constantly evolving. Statistics often change dramatically from year to year, with economic conditions heavily influencing the growth, retraction and overall stability of franchise systems in virtually all sectors.
Franchisedirect.com recently published an infographic that provides an interesting overview of franchising’s history and some notable statistics on the industry. Here are some of the numbers that stood out to us the most:
An Average of 300 Companies Start Franchising Each Year
According to Franchisedirect.com, “[a]n average of 300 new brands start franchising each year.” This means that on more days than not there is a new opportunity for prospective franchisees to explore. Franchising saw its first boom in the late 1950s, and approximately 60 years later the industry is – at least by some standards – stronger than ever.
There are More than 750,000 Active Franchised Outlets
The infographic indicates that there were expected to be more than 750,000 franchised outlets by the end of 2018. It also notes that one in seven businesses is a franchise. Of these franchises, slightly over half (53 percent) are owned by multi-unit franchisees. Just under half of all franchisees own a single outlet.
More Than 80 Percent of Franchises are Local or Regional Brands
50 percent of franchises are classified as “local” brands, while 34 percent are classified as “regional” brands. This means that just 16 percent are the national and global brands that most people picture when they hear the word, “franchise.” While this statistic may be surprising to some, it makes sense when you consider the high number of brands that start franchising each year.
Just Over a Third of Franchises are “Food-Related” Brands
Just over a third (37 percent) of franchises are classified as “food-related” brands. The remaining 63 percent are spread across 28 other sectors. Altogether, Franchisedirect.com identifies 226 “sub-sectors” in which franchise opportunities are available.
More than Half of All Franchises Cost More Than $250,000 to Open
The average initial investment for more than half of all franchises is in excess of $250,000. This includes the initial investment fee, equipment and furnishings, initial inventory, build-out costs, professional fees, reserve capital and the various other start-up costs listed in Item 7 of the Franchise Disclosure Document (FDD).
More New Franchises are Opening and Hiring More New Employees
The infographic cites International Franchise Association (IFA) data indicating that the number of franchised outlets increased by 1.6 percent in 2017, and that franchise employment was expected to grow by 3.7 when 2018’s final figures came in. A recent article on Blue MauMau indicates that franchise hiring is up in 2019 as well.
Speak With National Franchise Attorney Jeffrey M. Goldstein about Your Franchise Opportunity
Our firm offers four fixed-fee franchise review programs for prospective franchisees. If you are thinking about buying a franchise, it is important that you hire an attorney to review the FDD and franchise agreement – and potentially negotiate certain key provisions of the franchise agreement as well. To get started with a free, no-obligation consultation, call us at 202-293-3947 or tell us how to reach you online today.