Never being one to waste a whole lot of time getting things done, our new website is done, up and running, ready to go. Our Certified Franchise Brokers help people from all over the country to find the perfect Franchise opportunity for them to realize their entrepreneurial dreams. Why so much time and energy invested in this? Check out these statistics about Franchises and the economic effect on our economy.
Economic Activity in Franchised Businesses
In 2007, there were more than 828,000 establishments in franchise systems in the United States. These businesses directly provided:
9.1 million jobs
$304.4 billion in payroll
$802.2 billion of economic output
$468.5 billion to GDP
Franchised businesses amounted to 2.8 percent of all non-farm business establishments. Their economic activity accounted for:
6.2 percent of all private, non-farm jobs
3.4 percent of all private non-farm output
3.9 percent of all private non-farm GDP
3.4 percent of all U.S. GDP, including the government and farm sectors
Franchised businesses provided about the same number of jobs in the United States in 2007 as the manufacturers of durable goods, such as computers, industrial equipment, cars, trucks and planes. Franchised businesses provided more jobs than many other sectors of the economy, such as financial and insurance, wholesale trade, transportation and warehousing, and others.
Economic Activity Because of Franchised Businesses
The economic significance of franchising is greater than the activity in franchised businesses alone. Franchised businesses generate economic activity in other businesses, which is described as the indirect economic impact. Taking into consideration economic activity in franchised businesses and additional economic activity caused by franchised businesses, the total contributions to the U.S. economy in 2007 were:
17.4 million private non-farm jobs, or 11.8 percent of the total
$707.6 billion private non-farm payroll, or 9.7 percent of the total
$2.1 trillion of private non-farm output, or 9 percent of the total
$1.2 trillion of private non-farm GDP, or 9.7 percent of the total
Overall contribution to GDP because of franchised businesses accounted for 8.4 percent of total U.S. GDP, including government and farm sectors in 2007.
Business Model and Lines of Business
In 2007, business format franchising was far more prevalent than product distribution franchising, with 20 times the number of establishments, five times as many jobs, and four times the amount of economic output and contributions to GDP.
A further breakout of business format franchises into 10 business lines shows that Quick Service Restaurants generated millions of jobs and have a huge economic impact on many other businesses through ancillary purchases.
Quick Service Restaurants provided more establishments and jobs and generated more economic output than any other line of business with 37 percent of all jobs. Table/Full Services Restaurants provided 12.7 percent of all jobs and Business Services provided 12.4 percent of all jobs.
In terms of contribution to GDP, Quick Service Restaurants provided 21 percent of GDP, followed by Business Services 19.4 percent of GDP, and Real Estate 13 percent of GDP.
When measuring the ratio of franchised establishments to all establishments within a line of business, franchised restaurants made up the largest component of all Quick Service Restaurants (46.2 percent), followed by franchised hotels in the Lodging sector (21 percent), and franchised full service restaurants in the Table/Full Service Restaurants sector (12.7 percent).
When measuring the ratio of jobs in businesses compared to all companies within a line of business, Quick Service Restaurants also provided the largest share of jobs (68.5 percent), followed by Lodging (31.8 percent), and Table/Full Service Restaurants (21 percent) within their business sectors.
Eighty-six percent of establishments in the business format franchise sector were owned and operated by franchisees and 14 percent were company-owned and operated.
*Government sources indicate there are approximately 29 million businesses in the United States, including both employer and non-employer establishments.
**The Economic Census does not cover non-employer businesses, such as small family-run businesses and independent contractors. According to the Census Bureau there are 21.4 million non-employer businesses (73.8 percent) compared to 7.7 million businesses with paid employees (26.2 percent).