Franchised businesses account for nearly 50% of all retail sales in the United States.
The International Franchise Association has reported that franchising is responsible for 760,000 businesses, 18 million jobs, 14 percent of the private sector employment, and over $500 billion in payroll!
From January, 2000 to December, 2004 the index that tracks the performance of the top 50 franchisors increased 34.5% compared to a drop of 20.1% in the S&P 500 over the same period.
A 1999 study by The United States Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership and 97% of the were still open for business.
A U.S. Department of Commerce study conducted from 1971 to 1997 showed that during that time less than 5% of franchise businesses were closed each year.
A U.S. Small Business Administration study conducted from 1978 to 1998 found that 62% of non-franchised businesses closed within the first 6 years of their existence due to failure, bankruptcy, etc
Total sales by franchised businesses are projected to reach over $2 trillion, this year.
1 out of every 12 businesses is a franchised business.
A new franchised business is opened every 8 minutes of every business day.
In 2000, the median gross annual income, before taxes, of franchisees was in the $75,000 to $124,000 range, with over 30% of franchisees earning over $150,000 per year.
Franchising is the novice’s way of entering a market with little or no experience. We take it a step further by establishing the original idea as an ongoing business, retaining ownership all the way through the franchising phase in return for our equity investment and technical support during the process.
The franchising marketplace is dominated by a few companies that “market” franchises for companies or provides venues, conventions, for franchise owners to market their concepts to eager buyers. For this service they receive a fee, and then they are gone. Unfortunately, most of the franchises lack the financial muscle to provide more that an initial setup and a couple of months of training to its franchisees who often must rely on their own financial muscle to make the concept work in their marketplace.
Those concepts with the financial muscle extract sizable fees up front and control almost every aspect of the business for the franchisee including whom they can buy from and who they can market to in an area. They control their clients by being the sole source for products and advertising, at premium prices, and constant “monitoring” to keep up the corporate image. This is a tough fit for an entrepreneur with his or her own ideas about running a business.
We did find several franchise consulting and brokerage companies that try and match clients with franchise owners for a fee. Their approach is to create a business profile, match clients to prospective franchises, and help them evaluate and select the right franchise for the client. Unfortunately, this is where the companies stop providing services. They base their decision on the statistic that over 92% of all franchised businesses stay open for 10 years or longer. Wham, bam they are done! Unfortunately, the franchisee is now tightly locked into the model from which there is no escape, but usually with a steady income and often little resale value except to the originating company. http://gpke.com/service.htm