How is Franchising Represented in our Overall Economy?


During this edition of FranNet’s blog, we’re going to take a closer look at how much the business of franchising affects the overall U.S. economy. What is the impact and what are the implications? This will be a statistic-heavy exercise, so buckle up for some interesting assessments on the impact of franchising in our country today. 

In the quest to find the most recent and reliable study on the subject, we will directly reference a comprehensive research study commissioned by the International Franchise Association’s Franchise Education and Research Foundation and conducted by PwC, one of the world’s leading professional services firms. The full report is entitled, The Economic Impact of Franchised Businesses, Vol. IV, Sept. 2016, a copy of which can be found by following this link.

The summary provides us with the best look at some surprising and encouraging figures regarding the business of franchising in America. Quoted from the study directly about the sheer volume of individual franchises in the U.S.:

Franchised businesses (including business format and product distribution franchises) operated over 801,000 establishments in the United States in 2016, counting both establishments owned by franchisees and franchisors. These establishments represented 2.3 percent of all non-farm business establishments in the United States. Franchised businesses directly provided nearly 9.0 million jobs, met a $351 billion payroll, produced $868 billion of output, and added over $541 billion of gross domestic product (“GDP”).

We think the case is pretty clear that the business of franchising is not to be dismissed as a fringe opportunity, but rather a well-entrenched primary economic driver within our overall economy.

Another insightful section of the study reports on the individual states which boast the highest levels of franchise activity. Not too surprising when you consider overall populations, but Texas, California, Illinois, Ohio and Florida are leading the charge with the most franchise operations and jobs. However, when compared to the impact that franchising has on the size of individual statewide economies, we find that North Carolina, Kentucky and Tennessee are at the top of the list.

And how does franchising as a whole stack up in terms of jobs provided by sector in our economy? Quite well, ranking second overall just behind financial and insurance companies. So what other business sector categories did franchising top in the study? You may be surprised to find that franchising ranked ahead of real estate/renting/leasing, durable goods manufacturing, wholesale trade, transportation/warehousing and non-durable goods manufacturing.

It’s clear to see that the business of franchising plays a vital role in shaping our country’s overall economy. As a driving force, franchising is a primary player in the establishment of job opportunity and gross domestic product.

If you’re considering franchising as a career move, you’re obviously in good company. The impact of the combined strength of entrepreneurship cannot be discounted when considering the importance it brings to our economic health. If you’ve been mulling the thought of a franchise of your own, you’ll clearly be in good company.

The full report spans 582 pages and we don’t recommend reading the entire study cover to cover. But what we can tell you is this—franchising is both a viable and stable platform which has a well-defined impact on the U.S. economy.

Let’s chat! There’s a local FranNet consultant right in your market who knows that market inside and out – knows the personality of the market – knows the competitive landscape. FranNet has a great track record of assisting individuals on their path to entrepreneurship, and one of our franchise experts would love to provide you with guidance free of charge. Sound like something you might be interested in? Get started here and find your local consultant right now!


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