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Franchising: Advantages of a Franchise

Franchising as an industry first came into its own during the 1930s and 1940s when several hotels and gas stations decided to begin offering new dealers a comprehensive system of operational and marketing strategies. Since that time the franchising industry has become a national power in the U.S. economy and a blessing for risk-averse entrepreneurs. 

Why is franchising growing so rapidly? Because franchising works. Franchising allows aspiring business owners to pursue their dreams in an industry they love while eliminating much of the risk and guesswork that usually accompanies a new business start-up. A franchise provides a proven system: A business model forged from trial and error.

In fact, despite solemn growth over the past three years—due to economic downturn and lagging recovery—the International Franchise Association Educational Foundation foresees increased growth in 2013 in the number of franchise establishments, employment, output and contributions to the US gross domestic product (GDP).

Today, franchising is a major force in almost every industry imaginable, accounting for a disproportionate share of service-related sales throughout the U.S. Here are some more interesting statistics gathered from the International Franchise Association:

  • The franchising industry employs over 18 million people in the U.S., and over half (54%) of franchisors and franchisees expect to add jobs in their businesses in the year ahead.
  • Nearly 85 percent of franchisors say they plan to increase the number of establishments in 2012, with more than one-third (34.9%) saying they plan increases of 6 percent or more. No franchisors expect a significant decrease in the number of businesses, and no franchisors expect a sales decrease in the coming year.
  • There are believed to be more than 750,000 franchise businesses in the U.S., with 1.9% growth in 2011 and a 2.1% increase predicted for 2012, an increase of almost 14,000 franchise businesses, creating another 168,000 jobs.
  • Total sales for franchise businesses are approaching $2 trillion dollars annually. 2011 saw 5.3% growth, and 2012 promises another $37 Billion increase.
  • According to statistics from the U.S. Department of Commerce, 95% of franchises are still in business after 5 years.
  • While franchises account for only 8% of all U.S. businesses, they claim over 40% of all service-related revenue and 50% of all retails sales. 
  • If current trends are any indicator, the growth of the franchise industry shows no signs of letting up: more than 300 different types of industries and businesses are franchising, accounting for 35% of all retail goods and services sold, and franchises account for 3.0% of the US GDP, totaling some $460 Billion, up 4.8% from 2011. 

Franchisors also provide their franchisees with benefits that individuals would not be able to access if starting a business on their own. The most obvious is a proven business model with an established product or service along with built-in brand recognition. As a franchisee you will also receive the necessary start-up assistance and training to avoid mistakes that other new businesses may encounter. You will also receive technical, operational and managerial assistance unavailable to independent businesses.

Franchising has become the clear choice for entrepreneurs who acknowledge their need for guidance and who value a long-term plan for business success!

To learn more, please contact us.