Franchising as an industry has been around for a long time. Although its first few uses were deemed as failures (case in point, the Singer Company affair), it trod on, onto a path it was creating for itself. More than a century (and a few decades) later, in the late 1950s, the industry saw itself grow for the first time. Cut to present, and the franchise industry is skyrocketing, achieving inconceivable milestones in terms of business worldwide.
There have been many reasons for its success. With more independent businesses failing to make their mark in the market, investors tend to choose the safer alternative, i.e., franchise outlets. With so many means of communication available, these huge brands spare no costs to make sure that the masses are aware of their existence, resulting in increased interest and sales. A variety of other reasons also factor in. Still, the most attractive thing that a franchise offers potential investors is the promise of a solid customer base, propelled by the reputation of a good name and a proven business model.
Anyway, while you consider it, here are 30 facts about the franchise industry.
- On average, about 300 companies start franchising every year.
- Based purely on numbers, as on 31 March 2019, Seven-Eleven was the largest franchisor in the world, with an unbelievable 68,236 stores across the globe. (Source: Statista)
- Every one business out of seven is a franchise.
- With 44,758 outlets globally, Subway is the most franchised Food and Beverage brand, followed by McDonald’s with 36,525 outlets. (Source: CNBC News)
- While McDonald’s has lesser outlets (37,855) as compared to Subway, it trumps Subway in the number of countries it has franchises in. McDonald’s is present in 117 countries, while Subway is in 112. (Source)
- With 1.5 Lakh franchisees and 4600 franchises, India is the second-largest global franchise market in the world after the USA. (Source: Economic Times)
- In the next five years, the Indian franchise industry is expected to grow by about USD 140-150 billion.
- There are More than 750,000 Active Franchised Outlets in the USA itself. (Source: Goldstein Law Firm)
- 53% of all franchises are owned by multi-unit franchisees.
- Out of all the franchises, more than 80% are local or regional brands, while only 16% are national/global franchises.
- According to a Franchise Business Review report, 51.5% of food franchises less than USD 50,000 per year in net profits.
- 18 out of the Top 20 franchises worldwide are headquartered out of the United States of America, except Tim Hortons (Canada, Rank 18), and CNHLS (Also called Wallace Foods, China, Rank 19). The final count has a whopping 70 USA-based franchises out of the top 101 franchise list. (Source: Wikipedia)
- With close to 1800 outlets, Cafe Coffee Day is the only Indian Brand in the Global top 101 Franchise List. (Rank 46)
- Thirty-seven percent of all franchises are classified under “Food-Related” brands, with the rest being spread across 28 other sectors.
- More than half of all franchises require an initial investment upwards of USD 250,000 to open.
- During the course of a single business day, a new franchise opens every 8 minutes. (Source: ReferenceforBusiness.com)
- A total of 1,644,100 people are employed in franchise businesses across America. Out of this, 4,72,950 are in the retail food business, 6,54,160 in business service franchises, and 5,16,990 in personal services franchises. (Source: Statista)
- The annual global sales figure of McDonald’s is USD 96.15 Billion, it generates USD 3.89 billion in royalty revenues.
- QSR (Quick Service Restaurant) franchises top the list of the Franchise industry’s total economic output with USD 250 billion, followed by business services with around USD 100 billion.
- The total number of franchise establishments is 7,59,240, providing a cumulative economic output of USD 757.2 billion.
- An estimate draws a total of 3,000 different franchises currently under operation in the U.S.A, across 300 business categories.
- Franchise Businesses accounted for 10.5% of all businesses in 2007, according to The U.S. Census Bureau. (Census 2007)
- Small businesses are also witnessing an upward shift in franchising, with an IFA (International Franchise Association) listing about four percent of all small businesses in the USA as franchises.
- Based on an estimate, the franchise industry accounts for approx 50% of all retail sales in the US.
- On average, the royalty fee paid by franchisees ranges between three and six percent of gross monthly sales.
- Most franchise brands operate less than a hundred units.
- 10 years is the average length of a franchise contract.
- Due to the high number of F&B franchises, the number of downloads for food delivery apps has increased by 380% in comparison to 2016.
- In 2016, 94 ‘public-to-private’ (private equities buying out listed companies) deals were signed. In 2017, the number was registered at 152. (Source: Financial Times)
- Among the top 200 restaurant franchises, an additional 39% have gone global during the past three years. (Source: FranData)
Well, these were some interesting numbers to crunch upon. While it is often said that no amount of data can prepare your business for unexpected happenings in the market, it is never ill-advisable to run the facts before stepping into anything.