Prospective Franchisees and Franchisors Should see These Statistics

by Ed Teixeira

Whether you’re considering purchasing a new franchise or starting up a franchise company these key industry statistics from the U.S. Census Bureau provide insight into the role of franchising.

This year the U.S. Census Bureau in conjunction with the International Franchise Association reported franchise industry statistics for the first time. This data reveals by industry code the number of businesses in total and those operated as franchise outlets in total and then by the franchisee and franchisor.

Analyzing this data revealed some interesting results about the level of franchising in particular industries. For someone considering purchasing a franchise the level of franchise participation in a particular industry segment can indicate a possible strength or weakness about franchising in that industry.

The following statistics include appropriate commentary:

Industries with a High percentage of Franchise Outlets

Quick Serve Restaurants 211,313

Franchise Operated 125,000

Percent  59%

The percent of franchise operated QSR is far greater than with full service restaurants, which is indicative of the required investment and operational factors needed for a full service sit-down restaurant.

Mail and Copy Centers 5,220

Franchise Operated 3,546

Percent 68%

The majority of mail, copy and shipping centers are franchise operated. This is not surprising given the type of services provided and the ability for commodity pricing.

Children Exam Preparation and Tutoring  7,192

Franchise Operated 2,361

Percent 33%

Large franchisors dominate this industry segment. Huntington, Kumon and Sylvan are the big players.

Tax Preparation Services 25,000

Franchise Operated 5,416

Percent 22%

This franchise segment has remained vibrant and continues to welcome new franchisors despite the dominance of HR Block and Liberty.

Real Estate Brokers 109,400

Franchise Operated 22,000

Percent 20%

Spawned by Century 21 the franchised real estate industry has continued to grow. Branding and economies of scale make this sector a natural for franchising.

One segment with 100% franchise composition is the 24,888 New Car Dealers

Industries with a Low Percentage of Franchise Operations

Beauty Salons 81,632

Franchise Operated 6,500

Percent 8%

For certain reasons this sector has never taken to franchising as much as one would expect.

Senior Home Care 20,433

Franchise Operated 1,677

Percent 8.2%

Although the percent of franchise outlets is not high this sector has been experiencing significant growth. Look for this franchise segment to continue to increase in size and market dominance.

Home Healthcare 23,000

Franchise Operated 565

Percent 2.5%

Despite the growth in homecare services the regulatory requirements for skilled services and hands-on care make the home healthcare sector difficult to franchise. Control and oversight are strict requirements for this industry.

Pet Care 11,353

Franchise Operated 252

Percent 2.2%

Although a number of new pet care franchise concepts have arisen in recent years this sector has not made significant inroads in terms of the entire industry.

What does this data tell us? Industries that have a high percentage or large numbers of franchise outlets indicate that the products and services these industries provide lend themselves to the franchise model. Industries with a low number of outlets and a low percentage of total outlets are usually an indication that the industry does not readily lend itself to franchising.

© 2010 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com