A Look at How Franchises Impact the Economy
Many people do not realize how frequently they patronize franchises. From restaurants to hotels, the franchise industry is widespread and thriving.
Across the country, there is a wide variety of franchised businesses with over 300 different categories of products and services offered. One in seven American businesses is a franchise and there are currently close to 3,400 franchise brands in the United States.
Franchised businesses are a part of a growing trend in the United States that has a positive impact on the national, state, and local economies.
Revenue Generated by Franchises
One of the many benefits of purchasing a franchise is the easily recognizable name, logo, and products or services.
Independently owned and operated businesses must work twice as hard to make a name and positive reputation for their brand. They must also put more effort into their marketing campaigns. Franchises have the benefit of a parent company that provides the franchisees with a broader scope, branded resources, pertinent industry data, and marketing materials that they need to succeed.
Each individual franchise varies on the amount of revenue they bring annually because many factors affect the final number.
Each company must provide potential new franchisees with a Franchise Disclosure Document (FDD). The document breaks down all the fine print about startup costs, royalties, anticipated costs, recommendations on where to purchase supplies, and the potential revenue range.
Number of Jobs Generated by Franchising
Franchises create jobs in their communities and beyond. Not only are there employees at each business location, there are also employees that transport goods, provide delivery of materials, operate the warehouses that distribute their supplies, and work in the factories or farms that supply its goods. As of 2019, 7.6 million jobs had been created and 13.3 million jobs were supported by franchises.
Areas Primed for Future Franchise Growth
Successful franchises grow new locations faster than traditional small businesses. The quick expansion is in response to consumer demand.
Franchises offer stability for owners and consistency for consumers. Half of all new businesses fail within their first year, whereas a typical franchised business is still open after five years. These positive franchising results have led to a positive cycle of growth and the creation of a lucrative industry with an average of 300 new franchise brands is created annually.
Technology has become commonplace in business. Consumers now expect businesses to come to them and meet their needs. Franchises have been and will keep continuing with the trend of offering online ordering options, food or grocery delivery services, and the use of apps. Individual franchise locations will begin to integrate usable technology in-store with touch-screen ordering, QR code scanners, and virtual assistance. Franchised companies will work to stay competitive with corporations by staying on the forefront of consumer demands, quick access to orders, and customization options.
Fitness, home-based and children’s activity franchises are anticipated to grow significantly in the coming years. The major benefit for franchisees that operate from the home is the low overhead, greatly reduced operating costs, and a need for fewer employees. Parents and adult caregivers are spending record numbers on extracurricular activities for their children. The market is ripe for franchises that offer educational services, music lessons, dance lessons, and sports activities. As the demand grows, so does the diversity of franchise options in this niche market.
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