From grabbing a bite at a fast-food joint to going to a basketball game, we interact with franchises and franchisees on a daily basis. However, there are numerous franchise facts that many of us aren’t aware of. The history of modern franchising spans more than a century and a half, and it’s filled with intriguing and mind-blowing facts and stats.
Top 10 Franchise Facts and Stats
- Stats show that 10.5% of businesses in the US are franchisees.
- McDonald’s is the biggest franchise in the world, with over 33,000 outlets.
- Statistics for 2019 reveal there were 773,603 franchised establishments in the US alone.
- Subway’s franchise revenue was $10.4 billion in 2018.
- Domino’s is the biggest US pizza franchise, with gross annual sales of $12.25 billion.
- Smoothie King franchise failure rate is 28%, making it among the highest in the market.
- All professional sports teams in the US are considered franchises.
- The Dallas Cowboys are the wealthiest NFL franchise, valued at $5.7 billion.
- Global esports franchise stats forecast the market to generate $1.5 billion in revenue.
- The New York Knicks are the wealthiest NBA franchise, worth $5 billion.
General Franchise Industry Statistics and Facts
The franchise industry is ever-growing, so it’s not easy for a single franchise to come on top. However, the following companies and their respective owners are the ones who have made it to the franchising hall of fame thanks to some impressive numbers.
1. McDonald’s is the richest franchise in the world.
Today, McDonald’s is considered the world’s richest franchise. Moreover, the first five places on the list are taken up by food and beverage companies such as KFC, Burger King, 7-Eleven, and Domino’s.
2. McDonald’s is also the biggest franchise in the world, with over 33,000 outlets.
When we speak of McDonald’s, we’re not talking about a franchise but rather a franchise network. Established back in 1954, the fast-food restaurant chain has over 33,000 outlets worldwide, earning $89 billion in total sales.
3. Franchise statistics for 2019 reveal there were 773,603 franchised establishments in the US alone.
This figure is an estimate based on the data collected in the period from 2007 to 2020. Although the number of franchisees went down in 2013, it has been on a steady rise since.
4. Steve Ballmer is among the richest franchise owners in the world.
Steve Ballmer, the former Microsoft CEO, bought the Los Angeles Clippers for $2 billion in 2014. His net worth is estimated at $68.7 billion, making Ballmer the second-wealthiest sports franchise owner in the world.
Considering his net worth, it’s safe to assume that he is one of the 29% of Americans who can say that they live comfortably.
5. The franchise fact file for the US states that 10.5% of businesses are franchisees.
According to the US Census Bureau, 10.5% of all businesses are franchisees. The data from the most recent economic census revealed the US has about 453,326 franchisees or franchisor-owned businesses — out of 4.3 million businesses surveyed at the time.
6. Franchise failure rates can be as low as 0% and as high as 90%.
It is hard to talk about the failure rates of franchises in comparison to other businesses. In some industries, the failure rate is as high as 80% to 90%, while in some markets, hardly any franchises will fail.
7. Franchising is present in almost every business sector.
Franchise statistics reveal that service-related sectors, such as restaurants, hotels, home repair, and carpet cleaning, are among the most popular franchise options. Additionally, accounting services and package shipping are some of the most profitable business support services.
8. The franchise sector was expected to contribute 3% of the US GDP in 2018.
The US franchise sector was expected to account for 3% of the country’s gross domestic product (GDP) in 2018. The projected franchise sector’s growth should have exceeded that of the GDP, as its expected increase was 6.1%, or $451 billion.
Franchise Statistics for the Food & Drinks Industry
Based on the stats listed above, it is clear that food and beverage producers dominate the franchise industry. McDonald’s might be the most significant player in the market, but they are not the only one successful food franchise out there.
9. McDonald’s keeps 82% of the revenue generated by its franchisees.
Thanks to that fact, McDonald’s franchise revenue is among the highest on the planet. This is an impressive percentage compared to the 16% of the revenue McDonald’s keeps from company-operated locations (the operations costs not included).
10. Subway franchise revenue was $10.4 billion in 2018.
Even though Subway closed about 8% of its restaurants in 2018 and 2019, it is still popular throughout the US, making it a leader in the fast food sandwich industry.
11. Based on franchise statistics from 2020, the US is the largest pizza market.
In 2020, worldwide pizza sales topped $145 billion. Of this figure, Americans spent $46.24 billion on pizza, making them the world’s largest pizza market!
What is more, the demand is still growing, as 15% more Americans want to grab a slice every week than two years before.
12. Baskin-Robbins has the lowest total initial investment ranging from $94,350 to $402,200.
Recent franchise trends say that Baskin-Robbins is among the most profitable food franchises to invest in. The initial franchise fee is $25,000.
In comparison, you’d need to invest anywhere from $1 million to $2.2 million in the McDonald’s franchise, and you’d have to cough up $45,000 for securing the franchise fee.
13. In 2019, 93% of McDonald’s restaurants were franchised.
McDonald’s is one of the best franchise examples when it comes to size.
In terms of numbers, out of 38,695 restaurants at the end of 2019, 36,059 were franchised, and 2,636 restaurants were run directly by McDonald’s. The company’s long-term goal is to raise this percentage to 95%.
14. Domino’s is the biggest pizza franchise in the US, with gross annual sales of $12.25 billion.
Headquartered in Ann Arbor, Michigan, Domino’s is the top US pizza chain. The chain has 15,900 stores scattered across 85 countries.
The secret to Domino’s initial success was the pioneering concept of fast delivery that promised a fresh pizza on the customer’s doorstep in 30 minutes or less.
Nowadays, most of Domino’s revenue is derived from selling ingredients (e.g., dough and toppings) to other chains and their own franchised businesses.
15. The average 7-Eleven franchise success rate brings the owner a salary of $31,459.
The typical owner of the 7-Eleven franchise can hope for a salary of $31,459 (at the time of writing) with all the bonuses and extra compensation included. The full range of income can go from $13,190 to $191,986, depending on various factors.
16. Smoothie King franchise failure rate is 28%, making it among the highest in the market.
Based on this number, Smoothie King is among the least-favorable food companies to invest in. The Small Business Administration (SBA) alone granted 62 loans to the franchise since 2001, but the loan failure rate was a mind-boggling 46%.
8 Sports Franchise Facts
As you might have noticed from the general facts and stats, franchising and sports go pretty well together. It shouldn’t come as a surprise then that the biggest professional sports franchises are worth billions of dollars.
17. All professional sports teams in the US are considered franchises.
Although a franchise definition (for instance, an authorised agent for a company’s products or services) can be dubious at times, all sports teams in the United States are considered franchises. From the NBA to the NFL, professional sports leagues are comprised of teams that are really corporations on their own.
18. The Dallas Cowboys are the richest NFL franchise, valued at $5.7 billion.
According to Forbes, the Dallas Cowboys are by far the wealthiest NFL franchise. The runners-up, the New England Patriots, are worth $4.4 billion. Cincinnati Bengals are the last NFL franchise on the list, valued at “only” $2 billion.
19. Anytime Fitness is the biggest gym franchise with more than 4,000 franchise units globally.
Just one year after Anytime Fitness opened its first gym in 2001, the company started franchising. Today, they have more than 4,000 franchised units worldwide.
The average monthly royalty fee they charge ranges from $449 to $549. The value proposition of Anytime Fitness is the fact that they are open every day, all day. The membership in the gym applies even during unstaffed hours.
20. NHL’s richest sports franchise did not make the Forbes top 50 list back in 2018.
When Forbes released its annual ranking of the 50 most valuable sports teams in July 2018, not a single NHL team was on the list.
The New York Rangers had the best chances of making the list, though, with an estimated value of $1.5 billion. Behind them were Montreal Canadiens, Toronto Maple Leafs, and Chicago Blackhawks, all valued at $1–1.5 billion.
21. Global esports franchise statistics for 2021 forecast the market to generate $1.5 billion in revenue.
The vast majority of the earnings are expected to come from sponsorships and advertising. This doesn’t come as a surprise considering the fact that 600 million people worldwide watch esports.
22. The Dallas Cowboys are also the biggest sports franchise in the world.
The Dallas Cowboys aren’t only big in the NFL but the entire world. For instance, just their operating income is $425 million. Year after year, franchise statistics deem the Dallas Cowboys the biggest franchise in the world of sports.
The Texas football franchise is well ahead of the New York Yankees, the Los Angeles Lakers, and even Real Madrid, a European soccer giant.
23. The New York Knicks are the richest NBA franchise, worth $5 billion.
According to 2021 NBA franchise values, The New York Knicks are the richest team. The Golden State Warriors trail in second place, with an estimated value of $4,7 billion. Not far behind are the LA Lakers, who are worth $4.6 billion.
24. FIFA is the biggest video game franchise related to sports, with 260 million copies sold.
Moving onto the field of virtual sports, gamers love the FIFA franchise the most. There were 260 million copies of its games sold by 2021. The famous football simulation was first released back in 1994 when it was called FIFA International Soccer.
EA Sports’ Madden franchise is second in popularity, with 130 million games sold. Madden 17 franchise stats show that 1.06 million copies flew off the shelves during the first week alone. Americans made 74% of the total sales.
What was the first ever franchise?
Although proto-franchises can be found even in medieval Europe, Isaac M. Singer started the first modern franchise. He lived in the United States during the 1850s and worked on improving existing sewing machine models.
From a technical standpoint, Singer was successful, but he lacked the money and logistics to manufacture and distribute his invention.
Luckily, he got the idea to charge regional licensing fees to potential sellers, and voila, the first modern franchise was born! The Singer Corporation, established in 1851, has been producing consumer sewing machines to this day.
Is a franchise success rate greater than the one of a start-up?
Based on a 2019 research that compared the two-year success rates of franchises and conventional businesses, franchises had an 8% higher chance of success. Even the success rate of a franchise during the first year was 6.3% higher than that of an independent start-up.
What is special about a franchise?
Franchising is a business model ideal for small businesses that wish to increase profits and big companies that want to expand. In this sense, franchises are special, because they represent a unique symbiosis between small and big capital.
Entrepreneurs are intrigued by franchises, as business experience is not mandatory. Franchisors organize the necessary training for running a franchise. Finally, franchises come with an already-established reputation and brand image, increasing the chances of success.
What are the 3 types of franchises?
Although franchising takes various forms globally, there are three main types of franchises:
- product distribution franchise,
- management franchise, and
- business format franchise.
The third type of franchising is the most popular. Business format franchise involves franchisors giving the rights to trademarks and business processes (for a fee) to franchisees who sell the product or service.
What are the advantages of a franchise?
There is more than one advantage of a franchise. Capital requirements are lower, local management is often highly motivated, franchisees hire fewer employees, risks and liability are reduced; a franchise network grows faster, it’s fairly easy to build customer loyalty, etc.
What are the biggest franchise disadvantages?
Although the risks of running a franchise are lower than that of running a traditional business, franchising still involves signing a formal agreement with the franchisor. Moreover, there is little room for creativity, as the franchisor dictates the terms of the lease.
A franchisee can also often feel powerless, as poor performance by other outlets can hurt the business. Finally, the franchise revenue has to be shared with the franchisor.
Franchise Facts Conclusion & Recommendation
Franchising is a business model that has an exciting history, but more importantly — it has a bright future ahead. The above-listed franchise facts reveal that pretty much anything can be franchised, from an NFL team to a convenience store.
The secret behind the popularity of franchising is a relatively low initial investment combined with a favorable success rate. To make the most of it, we’d recommend checking out ten most promising franchise opportunities for 50k (and below) at the moment.
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