What is the Value of Franchising?

Franchising generates US$788 billion in revenue a year for the United States economy and has created over eight million jobs. Franchising provides a proven business structure for thousands of local business owners to be successful; on average, the typical franchise business provides 2.3 times more jobs than a non-franchised business. 

But what exactly is a franchise, and what makes franchising so successful? A franchise is a local business that licenses the branding and operational processes of a parent company but operates independently in a defined geographic market. The local owner, or franchisee, is responsible for hiring staff, organizing schedules, managing payroll, and all daily operational tasks as well as local sales and marketing.  

The value of franchising lies in the franchise system’s gives aspiring small business owners a head start toward becoming their own boss, with easier access to lines of credit than a traditional business and a proven business model that can set up new business owners for success. Because of these advantages, franchising is much more diverse than many people think. As an example, female and minority business owners make up 26 percent of franchise owners versus 17 percent of non-franchise business owners.  

Many people think franchising is exclusive to restaurants and the fast-food industry. However, food franchises represent only 25 percent of the total number of franchised businesses. Retail is close behind at 20 percent; while real estate services make up 17 percent of franchises; followed by personal services such as salons, gyms, and home health care at 15 percent; and other business services at 14 percent.  

Another common misconception of franchises is that they don’t treat employees well. In fact, a new study according to Oxford Economics found that employees who remain at a franchise are more likely to receive promotions to managerial roles, health insurance, paid time off, higher wages, better training, than those at non-franchise businesses.  

To sum up, the franchise business model has provided economic growth, created jobs, and given entrepreneurial opportunities to those who may not otherwise been able to pursue business ownership around the world. Name brand businesses and those that have just opened offer a range of readily accessible opportunities at accessible price points. To learn more about available franchise opportunities, visit the International Franchise Association’s franchise search page.