Discovering the Impact

Quick Search

Find the Economic Impact of Franchising

Don’t know your district?

Measuring activity in franchised businesses

The primary data source for this report is the 2007 Economic Census, published by the U.S. Census Bureau. The 2007 Economic Census Franchise Report provides estimates of franchised establishments, employment, annual sales, and payroll among businesses with paid employees by detailed industry sector at the national level . These data were supplemented using data from a variety of sources:

These data sources were used to derive estimates of franchised activity in businesses without paid employees (known as nonemployers) as well as franchised activities in additional industries not covered in the 2007 Economic Census and to allocate the national-level estimates to the state and congressional district levels.

Measuring activity occurring because of franchised businesses

WWe used the economic modeling system developed by the Minnesota IMPLAN Group to estimate the additional economic activity that occurs outside of franchised businesses because of the economic activity that occurs inside franchised businesses. IMPLAN is a well-known tool of its kind and shares the same fundamental modeling framework as the Regional Input-Output Modeling System developed by the U.S. Department of Commerce.

IMPLAN is built around an “input-output” table in which are recorded the purchases that each industry has made from other industries in past years. When economic activity occurs in a franchised business, purchases are made in other industries according to the patterns recorded in the input-output table.

These purchases in turn spark still more purchases, and so on. Meanwhile, employees and business owners make personal purchases out of the additional income that is generated by this process, sending more new demands rippling through the input-output table. The model provides a consistent framework to trace such spillover effects and estimate the jobs, payroll, output, and contribution to GDP that occur throughout the economy because of franchised businesses.

Note on Comparability with Previous Estimates

In February 2004, PwC released Volume I of The Economic Impact of Franchised Businesses, which provided measures of the total economic impact of franchised businesses in the United States using data for 2001. That report, the first of its kind, used data from County Business Patterns, Nonemployer Statistics, Dun & Bradstreet’s MarketPlace, and the IMPLAN model to estimate the economic activity directly and indirectly attributable to franchised businesses. Volume II of the study, released in January 2008, used the same data sources and methodology to estimate the total economic impact of franchised businesses in 2005.

Due to major changes in the underlying data sets and methodologies used in this report, the estimates contained in this report are not comparable to previous volumes of the study. In particular, the current estimates incorporate information from a census of businesses with paid employees, as reported in the 2007 Economic Census Franchise Report, along with other data sources.

Note on Comparability with Congressional Districts

In the previous two volumes of this study, a “congressional district” was defined as a collection of those whole counties any portion (other than a de minimis portion) of which falls in the actual congressional district. As a result, in the previous two volumes, summing results across congressional districts would result in double counting. For the current report, we have refined our methodology so that economic activity within a county located in multiple congressional districts is allocated among those congressional districts using zip-code level data to provide an exact mapping to actual congressional districts. As such, summing results across congressional districts in a state would now yield exactly the state totals.