Entrepreneurs Turn to Franchises

Franchises are becoming an increasingly popular way to start a business without totally flying solo.

Today, there are more than 3,000 franchise brands that span 230 different types of businesses, according to a new study (pdf) from a unit of the International Franchise Association.

The fast-food category still remains king, but the services sector has experienced the largest increase in the number of new business concepts. The association includes health and fitness, publications, and security and consumer businesses in the services sector.

Health and fitness concepts saw a 156 percent increase in the number of establishments between 2000 and 2006. Commercial and residential cleaning franchises remain the category's largest sector.

The retail store category dipped from 2000 to 2006 when measured by the number of franchise concepts. But the retailers experienced a 21 percent increase in the number of new establishments, fueled largely by sizable increases in computer stores, florists and retail clothing shops.

More than 300 small-business concepts adapted to the franchising model in 2006 while 900 new franchise concepts were launched between 2003 and 2005. Franchise companies overall added nearly 30,000 new establishments to the U.S. economy in 2006, making an average increase of 4 percent in overall establishments between 2005 and 2006.

In January, the association's educational foundation plans to release the second edition of its "Economic Impact of Franchised Businesses" prepared by PricewaterhouseCoopers. It measures job creation, payroll and economic output generated by the U.S. franchising industry.

By Sharon McLoone |  November 26, 2007; 9:15 AM ET Data Points
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Comments

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Is it a little unseemly for a media outlet with the finest journalistic heritage of the Washington Post to so openly provide credence to the IFA's latest pseudo-data?

Is is intellectually honest to indirectly encourage unsophisticated investors to risk their life savings when 85% of franchise systems die within 10 years (Shane)?

Like there's any difference between industrial and academic research standards! Yeesh.

Posted by: Les Stewart | November 27, 2007 1:07 PM

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