Census Offers Franchise Data

Reporting comprehensive data on franchise businesses for the first time, the U.S. Census Bureau found that franchises with paid employees accounted for 10.5 percent of the nation's businesses.
The Census first began collecting data on franchise businesses in 2007 and published that information today. With 295 industries studied, of the 4.3 million total establishments surveyed, 453,326 were either franchisee or franchisor-owned businesses.
The first-ever Economic Census Franchise Report also found that 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 million.
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.
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.
"We are pleased that the U.S. government has recognized franchising as a significant business model," said Alisa Harrison, spokesperson for the IFA. "Census officials told us they received a very good response to their franchise questions and so we feel we have a fairly accurate snapshot of franchsies with paid employees."
Harrison explained that the international services firm, PriceWaterhouseCoopers, compiles data for IFA on franchise businesses that do not have employees, and will now merge its figures with U.S. Census figures to get a clearer picture of the economic impact of franchise business.
"Those figures will be available in their next report for us," Harrison said.
The last assessment from PriceWaterhouseCoopers -- that is, including the franchise businesses with paid employees and those without -- showed 900,000 franchise units, 21 million jobs and $2.3 trillion in sales, Harrison said.
"With franchising, you can get into business for yourself but not by yourself," Harrison said, noting that someone starting out gains a great deal of support in knowledge, training and capital equipment through franchising.
"Franchising is also a great way to grow your business," she said.
"Franchising plays a vital role in our nation's economy; it's one of the big engines driving new job creation. These new data offer critical information to entrepreneurs who may be considering starting a franchise business," said David French, vice president of Government Relations for the IFA.
Limited-service restaurants, more commonly known as fast food restaurants, had the highest number of franchise establishments with paid employees, at 124,898, followed by gas stations with convenience stores -- 33,991 workers -- and full-service restaurants, with 30,130 employees.
New car dealers led in sales for franchise establishments with $687.7 billion, followed by gas stations with convenience stores at $131.1 billion and fast food restaurants with $112.6 billion in sales.
Sales for franchise establishments in the diet weight loss centers industry represented 62.7 percent of all sales for that industry, which ranked third behind new car dealers, where franchises accounted for 100 percent of sales in that industry, and fast food restaurants at 74.4 percent of industry sales.
"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.