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New economic impact study shows franchise businesses produce significant impact on U.S. economy

FOR IMMEDIATE RELEASE
Contact:
Matthew Haller, 202-460-8356
Jenna Weisbord, 310-995-0839
mhaller@franchise.org
jweisbord@franchise.org
@franchising411
 
WASHINGTON, D.C., Sept. 12, 2016—According to a comprehensive research study on the economic impact of franchising, there are 732,842 business format franchise establishments providing more than 7.6 million jobs, generating $674 billion in economic output and 2.5 percent of the Gross Domestic Product (GDP) for the U.S. economy.
 
Comprehensive report analyzes data by sector, state, and congressional district
 
The Economic Impact of Franchised Businesses, Vol. IV, Sept. 2016, was commissioned by the International Franchise Association’s Franchise Education and Research Foundation and conducted by PwC, one of the world’s leading professional services firms. The study shows the total franchise establishments, jobs, output and GDP and the economic contributions of franchising to the U.S. economy at the national, state, and congressional district level. Statistics are provided by business line and include the direct and indirect economic impact. The full study, with additional charts and public sentiment data from voters about franchises by state and congressional district, is available on the newly-launched www.FranchiseEconomy.com.
 
“The study illustrates that franchise businesses are a critical component of the U.S. economy, fostering entrepreneurship by empowering local, independent and diverse small business owners who are creating jobs in many business sectors,” said IFA President & CEO, Robert Cresanti, CFE. “As Washington works to strengthen and renew our economy, policymakers should remember that franchising is making a difference in every local community across the country.”
 
The PwC study incorporates the most recent data from governmental and private sources.
  • Franchise businesses provided more jobs in 2016 than wholesale trade; transportation and warehousing; nondurable goods manufacturing; and information (including software and print publishing, motion pictures and videos, radio and television broadcasting, and telecommunications carriers and resellers).
  • Taking into account the indirect impact of franchised businesses, business format franchises support more than 13.2 million jobs, $1.6 trillion in economic output for the U.S. economy and 5.8 percent of the Gross Domestic Product (GDP).
  • Jobs supported because of franchise businesses were at least 10 percent of the private sector nonfarm workforce in 33 states, and at least 6 percent in every state except the District of Columbia.
  • Quick service restaurants are the largest category, representing 25 percent of all franchise establishments, 45.5 percent of all franchise jobs, and 30.5 percent of GDP.
  • The number of people employed by franchises is greatest in California, Texas, Florida, Illinois, and Ohio.
  • Franchisees own and operate 88 percent of all business format franchise establishments and franchisors own and operate 12 percent.
  • Of the sectors shown below, only finance and insurance provided more jobs than franchised businesses:
The study was released in conjunction with IFA’s Franchise Action Network Annual Meeting in Washington, D.C. which brings together more than 300 franchise business leaders to raise awareness with policymakers about the industry’s economic contributions and the regulatory and policy environment impacting their continued success. IFA launched its @OurFranchise campaign, a nationwide public awareness and grassroots campaign in a three state tour this summer.
 
"This is clearly a robust marketplace, but headwinds persist which may erode the value proposition of the franchise model if not addressed by Congress. Franchise businesses have created record numbers of jobs, generated opportunity and economic growth in communities nationwide and returned tax dollars to help support the localities in which we operate,” added Cresanti. “As we spend the next year educating the new Congress and administration our story through the IFA's @OurFranchise campaign, we hope to show policymakers from both sides of the aisle that this business model is worth promoting."
 
Jobs by Selected Economic Sector in 2016
Sector
Jobs
Financial and insurance
10,191,600
Franchise businesses
8,968,000*
Real estate and rental and leasing
8,461,900
Durable goods manufacturing
8,181,800
Wholesale trade
6,554,900
Transportation and warehousing
6,537,700
Nondurable goods manufacturing
4,963,600
Information
3,363,300
Source: PwC projections of data from the U.S. Bureau of Economic Analysis for sectors other than franchise businesses. *Includes both business format and product distribution franchises.
 
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About the International Franchise Association

Celebrating 56 years of excellence, education and advocacy, the International Franchise Association is the world's oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.