GITNUX REPORT 2024

Franchise Statistics: Over 773K Establishments Contribute $787.5B to U.S.

Unlocking the Numbers: Inside the Thriving Franchise Industry Driving the U.S. Economy Forward

Author: Jannik Lindner

First published: 7/17/2024

Statistic 1

Franchising contributes $787.5 billion to the U.S. economy

Statistic 2

Franchising accounts for 3% of the total U.S. GDP

Statistic 3

The franchise industry contributes $468 billion in payroll annually

Statistic 4

Franchising accounts for 50% of all retail sales in the United States

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The franchise industry employs 8.4 million people in the United States

Statistic 6

The franchise industry is expected to create 800,000 new jobs between 2021 and 2022

Statistic 7

The franchise industry contributes to 7.6% of all private-sector employment in the U.S.

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The average franchise requires 5 employees per location

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The average initial investment for a franchise is between $50,000 and $200,000

Statistic 10

The average franchise royalty fee is 6.7% of gross sales

Statistic 11

The average franchise generates $1.1 million in annual revenue

Statistic 12

The average time to break even on a franchise investment is 3.5 years

Statistic 13

The average franchise requires $250,000 in liquid assets from potential franchisees

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85% of franchisors offer some form of financing assistance to franchisees

Statistic 15

The average franchise spends 3% of revenues on marketing

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70% of franchises require less than $250,000 to start

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The average franchise generates a 10.5% return on investment

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40% of franchises offer in-house financing options to franchisees

Statistic 19

The average franchise royalty fee is paid weekly by 60% of franchisees

Statistic 20

The average franchise spends $5,000 on recruitment per new franchisee

Statistic 21

Quick service restaurants make up 25% of all franchise establishments

Statistic 22

Food franchises account for about 36% of all franchise establishments

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Personal services franchises are the fastest-growing sector, with a 3% growth rate in 2021

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Retail franchises make up 18% of all franchise establishments

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Business services franchises make up 11% of all franchise establishments

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The average franchise agreement lasts for 10 years

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The average franchise requires 3-6 months to open after signing the agreement

Statistic 28

The average franchise disclosure document is 200 pages long

Statistic 29

The average franchise territory covers a population of 50,000 people

Statistic 30

30% of franchises offer exclusive territories to franchisees

Statistic 31

The average franchise training program lasts 10 days

Statistic 32

80% of franchises offer ongoing training to franchisees

Statistic 33

90% of franchises require franchisees to attend an initial training program

Statistic 34

The average franchise agreement includes a non-compete clause lasting 2 years

Statistic 35

The franchise industry is projected to grow by 1.5% in 2021

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The franchise industry is expected to recover to pre-pandemic levels by the end of 2021

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The franchise industry has grown by 6.3% annually from 2014 to 2019

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The franchise industry grew by 1.9% in 2020 despite the pandemic

Statistic 39

The franchise industry is projected to add 26,000 new locations in 2021

Statistic 40

The franchise industry is expected to grow by 7% annually through 2025

Statistic 41

There are over 773,600 franchise establishments in the United States

Statistic 42

There are over 3,000 different franchise brands in the United States

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25% of franchises have been in business for over 26 years

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The average franchise has 285 units

Statistic 45

The average franchise has been in business for 19.5 years

Statistic 46

The franchise industry contributes to 4% of all business establishments in the U.S.

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50% of franchises have been in business for less than 10 years

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58% of franchise owners are male, while 42% are female

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The average franchise owner is 50 years old

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32% of franchise owners have a bachelor's degree

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20% of franchises are minority-owned

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15% of franchises are veteran-owned

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60% of franchise owners have previous business ownership experience

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77% of franchises require franchisees to have prior industry experience

Statistic 55

80% of franchisees own and operate a single unit

Statistic 56

95% of franchises require franchisees to work full-time in the business

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25% of franchises are home-based businesses

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65% of franchises offer multi-unit development opportunities

Statistic 59

35% of franchises offer area development agreements

Statistic 60

50% of franchise businesses survive after 7 years, compared to 20% of independent businesses

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75% of franchise owners report being satisfied with their franchise investment

Statistic 62

92% of franchisees consider their franchise opportunity to be a good investment

Statistic 63

The average franchise has a 90% renewal rate at the end of the initial agreement term

Statistic 64

7-Eleven is the largest franchise in the world by number of units, with over 71,000 stores

Statistic 65

McDonald's is the most valuable franchise brand, worth over $130 billion

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Summary

  • There are over 773,600 franchise establishments in the United States
  • Franchising contributes $787.5 billion to the U.S. economy
  • The franchise industry employs 8.4 million people in the United States
  • Quick service restaurants make up 25% of all franchise establishments
  • The average initial investment for a franchise is between $50,000 and $200,000
  • 7-Eleven is the largest franchise in the world by number of units, with over 71,000 stores
  • The franchise industry is projected to grow by 1.5% in 2021
  • Food franchises account for about 36% of all franchise establishments
  • The average franchise royalty fee is 6.7% of gross sales
  • Franchising accounts for 3% of the total U.S. GDP
  • 50% of franchise businesses survive after 7 years, compared to 20% of independent businesses
  • The franchise industry is expected to create 800,000 new jobs between 2021 and 2022
  • McDonald's is the most valuable franchise brand, worth over $130 billion
  • The average franchise agreement lasts for 10 years
  • Personal services franchises are the fastest-growing sector, with a 3% growth rate in 2021

<p>Breaking news: The franchise world is a bustling empire with over 773,600 establishments in the U.S., enough to make your head spin faster than a fast-food drive-thru! With contributions of $787.5 billion to the economy, employing 8.4 million people, and a juicy forecasted growth of 1.5% in 2021, franchising isnt just about flipping burgers—its a major player in the business game. So, grab your financial calculator and join us as we dive into the wild and wacky world of franchises, where the only limits are the 200 pages of a franchise disclosure document!</p>

Economic Impact

  • Franchising contributes $787.5 billion to the U.S. economy
  • Franchising accounts for 3% of the total U.S. GDP
  • The franchise industry contributes $468 billion in payroll annually
  • Franchising accounts for 50% of all retail sales in the United States

Interpretation

Franchising isn't just about golden arches and catchy jingles—it's a serious economic powerhouse that packs a $787.5 billion punch in the U.S. economy. With 3% of the total GDP in its grip, the franchise industry is no small fry. And let's not forget the impressive $468 billion in payroll it dishes out annually. So the next time you're sipping a frothy latte or shopping for a new pair of sneakers, remember that chances are, you're feeding into the belly of a franchise giant.

Employment

  • The franchise industry employs 8.4 million people in the United States
  • The franchise industry is expected to create 800,000 new jobs between 2021 and 2022
  • The franchise industry contributes to 7.6% of all private-sector employment in the U.S.
  • The average franchise requires 5 employees per location

Interpretation

The franchise industry seems to be multiplying faster than a greased-up Monopoly player on Boardwalk. With over 8 million employees already in its monopoly, and a projected 800,000 new job offerings coming up, it's almost as if franchises are the WeWork of the business world – big, bustling, and always ready to expand. At 7.6% of the private-sector pie, franchising is no small fry. So next time you see those familiar golden arches or catchy jingles, just remember – there's a lot more than just burgers and fries at play in the wide world of franchises.

Financial Aspects

  • The average initial investment for a franchise is between $50,000 and $200,000
  • The average franchise royalty fee is 6.7% of gross sales
  • The average franchise generates $1.1 million in annual revenue
  • The average time to break even on a franchise investment is 3.5 years
  • The average franchise requires $250,000 in liquid assets from potential franchisees
  • 85% of franchisors offer some form of financing assistance to franchisees
  • The average franchise spends 3% of revenues on marketing
  • 70% of franchises require less than $250,000 to start
  • The average franchise generates a 10.5% return on investment
  • 40% of franchises offer in-house financing options to franchisees
  • The average franchise royalty fee is paid weekly by 60% of franchisees
  • The average franchise spends $5,000 on recruitment per new franchisee

Interpretation

Franchising – where you can pay to play in the business world. A risky game indeed, with an average initial investment of $50,000 to $200,000 just to join the party. But fear not, as 85% of franchisors are kind enough to offer financial assistance to help grease the wheels. However, don't let the numbers deceive you; with an average annual revenue of $1.1 million, it seems there is still plenty of cash to be made in this arena. Break-even might just be a mere 3.5 years away, but watch out for those sneaky royalty fees lurking at 6.7% of your hard-earned sales. Marketing is key, as 3% of revenues must be sacrificed to the advertising gods. In the end, the return on investment sits at a tantalizing 10.5%, making franchising a tantalizing but treacherous venture – proceed with caution and a hefty $250,000 in liquid assets at your disposal.

Industry Sectors

  • Quick service restaurants make up 25% of all franchise establishments
  • Food franchises account for about 36% of all franchise establishments
  • Personal services franchises are the fastest-growing sector, with a 3% growth rate in 2021
  • Retail franchises make up 18% of all franchise establishments
  • Business services franchises make up 11% of all franchise establishments

Interpretation

In the dynamic world of franchising, it seems there's no shortage of options for aspiring entrepreneurs to sink their teeth into. From foodie havens to personal pampering palaces, and the ever-reliable quick service joints, the franchise landscape is more diverse than a menu at a multinational chain. But don't sleep on the rising stars of personal services, proving that in a time of constant change, there's big bucks to be made by offering that personal touch. So whether you're craving a juicy burger, a fresh manicure, or a sturdy business plan, the world of franchises has something for everyone - and a slice of the pie for every industry under the sun.

Legal Aspects

  • The average franchise agreement lasts for 10 years
  • The average franchise requires 3-6 months to open after signing the agreement
  • The average franchise disclosure document is 200 pages long
  • The average franchise territory covers a population of 50,000 people
  • 30% of franchises offer exclusive territories to franchisees
  • The average franchise training program lasts 10 days
  • 80% of franchises offer ongoing training to franchisees
  • 90% of franchises require franchisees to attend an initial training program
  • The average franchise agreement includes a non-compete clause lasting 2 years

Interpretation

The world of franchising is a dance of numbers and fine print, where the length of an agreement can easily outlast a Hollywood marriage, but the time it takes to actually open shop would make even the fastest snail blush. With disclosure documents thicker than a phone book and training programs that can feel longer than a summer vacation, it's clear that running a franchise is not for the faint of heart. And let's not forget the exclusivity of territories and non-compete clauses that can make navigating this competitive landscape feel like a game of Monopoly on steroids. So, if you're ready to jump into the franchise game, be prepared for a wild ride that's equal parts thrilling and headache-inducing.

Market Growth

  • The franchise industry is projected to grow by 1.5% in 2021
  • The franchise industry is expected to recover to pre-pandemic levels by the end of 2021
  • The franchise industry has grown by 6.3% annually from 2014 to 2019
  • The franchise industry grew by 1.9% in 2020 despite the pandemic
  • The franchise industry is projected to add 26,000 new locations in 2021
  • The franchise industry is expected to grow by 7% annually through 2025

Interpretation

The franchise industry seems to possess a resilience akin to a well-seasoned superhero—bouncing back from challenges with a swagger that says, "pandemic, what pandemic?" With growth rates as consistent as a morning cup of coffee, the industry is evidently poised to emerge triumphant in 2021, surpassing pre-pandemic levels faster than you can say "frappuccino." As it sets its sights on adding 26,000 new locations this year and continuing its streak with a projected 7% annual growth through 2025, one thing is clear: franchising isn't just about burgers and fries; it's about building an empire, one golden arch at a time.

Market Size

  • There are over 773,600 franchise establishments in the United States
  • There are over 3,000 different franchise brands in the United States
  • 25% of franchises have been in business for over 26 years
  • The average franchise has 285 units
  • The average franchise has been in business for 19.5 years
  • The franchise industry contributes to 4% of all business establishments in the U.S.
  • 50% of franchises have been in business for less than 10 years

Interpretation

In a world where trends come and go faster than you can say "unicorn latte," the franchise industry stands out as the epitome of longevity and adaptability. With over 773,600 establishments and 3,000 distinct brands gracing the American market, it's clear that the franchise model is here to stay. A quarter of these franchises have confidently weathered the storm for over 26 years, while the cheeky average franchise has been in business for a sprightly 19.5 years with 285 units to boast about. In a refreshing twist, the industry isn't afraid to embrace the new, with 50% flourishing for less than a decade. So, whether you're hankering for some old-school wisdom or craving a taste of innovation, it seems like the franchise world has a little something for everyone in this delightful game of business bingo.

Ownership Demographics

  • 58% of franchise owners are male, while 42% are female
  • The average franchise owner is 50 years old
  • 32% of franchise owners have a bachelor's degree
  • 20% of franchises are minority-owned
  • 15% of franchises are veteran-owned
  • 60% of franchise owners have previous business ownership experience
  • 77% of franchises require franchisees to have prior industry experience

Interpretation

In the world of franchise ownership, it seems that the status quo is still firmly in the hands of middle-aged men, as 58% of them proudly hold the reins compared to their female counterparts at 42%. However, in a field where experience reigns supreme, age might just be a number as the average franchise owner clocks in at a ripe 50 years old. Education also plays a part with 32% boasting a bachelor's degree, but diversity is making strides with 20% of franchises minority-owned and 15% veteran-owned. It seems that the road to franchising success is paved with past entrepreneurial ventures, as 60% have prior business ownership experience. But beware, as 77% of franchises demand industry know-how before you can hop on board. So, if you're ready to franchise, buckle up and bring your A-game – it's a ride worth taking.

Ownership Structure

  • 80% of franchisees own and operate a single unit
  • 95% of franchises require franchisees to work full-time in the business
  • 25% of franchises are home-based businesses
  • 65% of franchises offer multi-unit development opportunities
  • 35% of franchises offer area development agreements

Interpretation

In a world where the franchise game is strong, the stats speak volumes: with 80% of franchisees rocking the solo act, it's clear that independence is their jam. Add in the 95% full-time hustle requirement and you've got dedicated entrepreneurs willing to go the distance. But don't be fooled by the 25% rocking the home-based vibe - these hustlers are proving that big dreams can start from the comfort of your own couch. And for those ambitious souls eyeing expansion, take note: 65% of franchises are serving up multi-unit opportunities, while 35% are offering area development agreements for those craving a larger slice of the pie. Franchising: where the stats are sizzling and the hustle is real.

Success Rates

  • 50% of franchise businesses survive after 7 years, compared to 20% of independent businesses
  • 75% of franchise owners report being satisfied with their franchise investment
  • 92% of franchisees consider their franchise opportunity to be a good investment
  • The average franchise has a 90% renewal rate at the end of the initial agreement term

Interpretation

In the tumultuous world of entrepreneurship, statistics often wield the power of both a sword and a shield. While it may seem like dancing through a minefield, franchising emerges as the suave tango partner effortlessly leading the steps. With a survival rate that puts even cats to shame, franchise businesses prance through the seven-year itch while independent businesses stare in awe. Like a well-kept secret passed through knowing whispers, franchise owners find themselves nodding in contentment at their investment, a satisfaction rate higher than a cat's aloof purr. In a world where financial decisions often resemble blindfolded darts, franchisees don their bespoke suits of confidence, standing at a resounding 92% proclaiming their investment's worth. At the end of the contractual waltz, franchises gracefully enter the renewal ballroom, where a stunning 90% find themselves yearning for an encore, a feat rarer than a unicorn sighting at Times Square.

Top Franchises

  • 7-Eleven is the largest franchise in the world by number of units, with over 71,000 stores
  • McDonald's is the most valuable franchise brand, worth over $130 billion

Interpretation

In the world of franchises, numbers don't lie, and 7-Eleven and McDonald's are undoubtedly heavy hitters. With a staggering 71,000 stores globally, 7-Eleven reigns supreme in sheer quantity, proving that convenience truly knows no bounds. Meanwhile, McDonald's struts as the ultimate golden arches of success, boasting a brand value that could make even the Hamburglar go green with envy at over $130 billion. The fast-food giant serves up a value meal of profitability and recognition that is truly a Big Mac among franchises.

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