Franchise Statistics For The Business Proprietor
A long standing tradition in the business sector has been franchises. A franchise is a business owner who uses an existing firm’s successful business model to offer specific products and services. Thirty three countries have laws that regulate franchising to use a vendor’s trademark and to distribute their goods. The operator generally pays a supplier fee.
International Franchise Association
The International Franchise Association is the primary source of data, resources and research information to assist interested investors in obtaining valuable franchise information. The IFA speculates as of 2011 over 735,571 franchise units existed in the U.S. with a 1.9% growth rate for 2012.
Benefit of Franchises
Franchise brands represent a proven system. A franchisee typically researches the market and assesses different ideas and typically eradicates businesses that don’t work in a market. Research helps them identify what works and drives income and profitability. Almost three-fifths of top 500 franchises offer some type of discount or assistance for military veterans who become franchisees.
The franchiser creates a system others can follow and it typically makes its brand clear and recognizable. When people see a brand they trust, they understand the values of the service and the services they should expect. Franchisers go through a great deal of time and effort to protect their logos and their brands.
Franchises are really about best practice after vendors put months and years into developing a system that works so franchisees don’t have to labor over building an organization from the ground up.
The median age for franchise owners is 45-54 years old with the majority of these business owners residing in California (37,238 units) and Texas (28,094). States with the least amount of franchisees are Alaska (695 units) and Vermont (619 units) Washington D.C. and the territories are excluded.
Certain industries are more popular than others; Quick-service restaurants, Lodging and business-related have a larger market share than Video, security-related and party-related goods/services represent the least amount of franchisees.
Individuals who possess a bachelor’s degree own 44% of the franchise market share and 19% of owners hold an advanced degree. Military veterans make up 12% of ownership.
Men represent higher ownership of franchises than women at 71.9% ownership compared to 28.1% ownership. Men also represent a slightly higher ownership of multiple franchise units at 20.1% versus 16.2%. Multi-unit operators own 54% of all outlets. Within this group 52% of franchise owners own two franchises and 17% own three. However, 87.7% of all multi-unit operators own one brand.
What a Franchise Can Cost
The average start up investment is $520,000 over 3,500 brands in 200 sectors and franchise operators over 55 years old represent 28% of the market while 12% are represented by individuals 34 years old or younger.
The length of time owners retain their franchise is sobering. 20% own their business for more than 10 years, 18% own their business for 6-9 years, and 32% for 2-5 years and 30% own their franchise for less than 2 years.
Franchise owners work hard to maintain their investment with 21% working 60+ hours or more and 23% work 50-60 hours per week. 26% of franchisees work more between 40-60 hours per week and the numbers tailor off with 13% working 30 hours or less and 7% working 30-40 hours per week.
Owning a franchise pays off but income levels reveal a disparity of pre-tax income between men and women. Men earn an average of $73,261 per year while women earn $54,408 per year. Only 11% of franchise owners make over $150,000 per year.
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