Report Objectives and Importance

The first objective of The Economic Impact of Franchised Businesses report is to estimate the amount of activity generated within franchised businesses. The report found that the direct economic output of franchises increased by more than 40 percent from 2001 to 2005.

In 2005, American franchised businesses:

• operated 909,253 establishments
• constituted 3.3 percent of all business establishments
• provided 11 million jobs
• contributed $278.6 billion in payroll
• produced $880.9 billion of output

These numbers illustrate significant growth since 2001. Overall, the number of franchised establishments in the U.S. grew at an average annual rate of 4.3 percent between 2001 and 2005. More importantly, the number of jobs in franchised businesses grew at an average annual rate of 3.0 percent over the same period.

Economic Significance

The economic impact of franchising extends beyond the walls of these businesses. Franchised businesses buy products and services from non-franchised businesses, and employees of franchises buy products and services with their salaries. For this reason, the second objective of the report is to estimate the amount of economic activity that occurs because of franchised businesses.

Counting economic results both inside and outside of franchising, franchised businesses in the United States were the cause of:

• 21.0 million jobs, or 15.3 percent of private-sector jobs
• $660.9 billion of payroll, or 12.5 percent of private-sector payrolls
• $2.31 trillion of output, or 11.4 percent of private-sector output

The report estimates the indirect economic impact of franchised businesses based on the following measures:

• Number of jobs filled because of franchised businesses
• Size of payrolls met because of franchised businesses
• Value of output produced because of franchised businesses