Franchise Statistics – Are They Ever Controversial
Because of hearing and reading statistics many times in my years working with franchises, I thought it would be an easy job to put together some basic franchise statistics (number of franchises, revenue, growth patterns, success rates). Was I wrong!
Great Looking Statistics
When I started looking for reliable statistics, I was amazed to see that many websites put up great sounding statistics with no indication of where they come from. But do they ever look good!
- Franchising creates almost $2,000,000,000,000 (2 trillion) revenue every year
- A 1999 study by The United States Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership and 97% of them were still open for business
- Franchising employs over 1 million people in Canada or 1 out of every 14 working Canadians is employed by a Franchise
- A Canadian franchise opens every 2 hours 365 days a year
- Of all the franchises opened in Canada within the last 5 years, 86% are under the same ownership and 97% are still in business
Debates, Disputes and Controversy
As I looked further, I found fascinating posts debunking some of these statistics, along with passionate discussions about methodologies, sources and attribution. Have a look at blue maumau’s post on unreliable franchise statistics or check out their reproduction of a letter from the IFA (International Franchising Association) disclaiming the use of these statistics.
Who was it that said ‘Lies, Lies and damned statistics’? Benjamin Disraeli, then Mark Twain, wasn’t it? A mathematician I know well who teaches statistics said that you can make statistics say anything, depending how you crunch the numbers.
Reliable Statistics
The key is knowing where your numbers come from, who collated them, and what their interests are.
Having said all that, the IFA commissioned a study from PricewaterhouseCoopers looking at the economic impact of franchising between 2001 and 2005 in the US. Some of their numbers are
- In 2005, more than 900,000 franchised establishments generated over $880 billion of direct economic output
- The franchising industry provided jobs for more than 11 million American workers, or just over 8 percent of all U.S. private sector employment
- Direct economic output increased by more than 40 percent from 2001 to 2005, from $624.6 billion to $880.9 billion.
In Canada, the Canadian Franchising Association has statistics (with attributions) available on their fast facts page, including
- There being over 78,000 franchises in Canada employing over 1,000,000 people
- Franchising accounts for $90 billion per year in sales nationally or 10% of Canada’s Gross Domestic Product (GDP)
While these numbers are presented by organization aimed at presenting franchising, they come from external and reputable sources, and are a good starting point for looking at the real impact of franchising on the North American economy. As we can all see, franchising is a very important factors in the economies of both Canada and the United States. And those of us who work in and with the industry can sit back and relax, knowing that not all the statistics out there are inflated or unreliable.
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