First Release of Comprehensive Franchise Data

September 14, 2010

From: http://www.census.gov/newsroom/releases/archives/economic_census/cb10-141.html

The U.S. Census Bureau reports franchise businesses accounted for 10.5 percent of businesses with paid employees in the 295 industries for which franchising data were collected in 2007. Of the 4.3 million total establishments surveyed, 453,326 were either franchisee or franchisor-owned businesses.

Additionally, franchise businesses accounted for nearly $1.3 trillion of the $7.7 trillion in total sales for these industries, $153.7 billion out of the $1.6 trillion in total payroll, and 7.9 million workers out of a total workforce of 59.0 million.

The 2007 Economic Census Franchise Report is the first comprehensive and detailed report by the Census Bureau on this segment of the U.S. economy. The concept of collecting these data was the result of a partnership between the Census Bureau and the International Franchise Association that focused on better measuring the role of franchising in the economy. Previous economic censuses included a question on franchising for only two industries, limited-service and full-service restaurants.

“The understanding we gain from these statistics about what impact franchise businesses have on the U.S. economy is a good example of how government and business can partner to provide relevant, quality data to the business community,” said Tom Mesenbourg, deputy director of the U.S. Census Bureau.

“Franchising plays a vital role in our nation’s economy and drives new job creation,” said Ken Walker, chairman of the International Franchise Association and Chairman and CEO of Driven Brands. “These new data demonstrate that franchise businesses provide many options for entrepreneurs who may be considering starting a franchise business. We appreciate the efforts by the Census Bureau to collect and make these data available.”

The report includes statistics on the number of businesses with paid employees engaged in franchising, annual sales for these businesses, and employment and payroll. These data are broken out by industry in three categories: franchisor-owned businesses, franchisee-owned businesses and all businesses.

Among franchise businesses, 77.4 percent of the establishments were franchisee-owned, accounting for $1.1 trillion in sales, $125.1 billion in annual payroll and employing nearly 6.3 million workers. Franchisor-owned businesses made up 22.6 percent of franchise businesses, with $210.4 billion in sales, $28.6 billion in annual payroll and 1.6 million workers.

Highlights from the report:

  • Limited-service restaurants, sometimes called fast food restaurants, had the highest number of franchise establishments with paid employees (124,898), followed by gas stations with convenience stores (33,991), and full-service restaurants (30,130).
  • New car dealers led in sales for franchise establishments ($687.7 billion), followed by gas stations with convenience stores ($131.1 billion) and limited-service restaurants ($112.6 billion).
  • Sales for franchise establishments in the diet weight loss centers industry represented 62.7 percent of all sales for that industry, number three behind new car dealers (100 percent) and limited service restaurants (74.4 percent).
  • Limited-service restaurants also had the third highest percentage (59.1 percent) of franchise establishments compared with all establishments within that industry, surpassed only by new car dealers (100 percent) and private mail centers (67.9 percent).
  • Sales per establishment in the used auto dealer industry tended to be higher for franchise businesses than for non-franchise businesses. Franchise establishments in this industry reported sales per business of $16.2 million versus $2.5 million for the industry as a whole, a difference of $13.7 million.

The U.S. Census Bureau reports franchise businesses accounted for 10.5 percent of businesses with paid employees in the 295 industries for which franchising data were collected in 2007. Of the 4.3 million total establishments surveyed, 453,326 were either franchisee or franchisor-owned businesses.