Interesting facts about US franchising
When I started my blog more than two months ago I wanted to discuss a franchise as one of the most developed form of business in the United States. But I never knew that it is SO DEVELOPED!
I found an interesting statistics that proves this.
- A new Franchised Business opens somewhere in the United States every 8 minutes.
- 75 industries use franchising to distribute goods and services to consumers.
- Franchised Businesses provide goods and services worth $624.6 billion per year in the United States (2001)
- There are 767,483 franchised business establishments in the United States (2001).
- Franchised Businesses provide over 18,000,000 jobs in the United States (2004 estimate)
- In the United States more than 40% of all retail sales come through franchising.
After realizing that facts I’m even more surprised thinking about countries (many of less developed countries and former Soviet Union republics) that even have no franchise legislation and that don’t develop that business… I have no idea why this can happen…
June 29th, 2006 at 5:04 am
As I understand the governments of that less developed countries afraid to loose control over their economies. The main reason is that there are no or very few successful national enterprises that can develop their business systems through franchise procedures. Those governments do not want to share their power with American or European capital. Those politicians think much more about their personal interests than about the interests of their nation and common people. I hate this!
June 29th, 2006 at 5:05 am
Thank you for the comment. Reading you thoughts I found one more possible reason. Maybe they afraid of capital mobility as franchisees in their countries will have to pay some initial fees and royalty to the companies located in the other countries. If it’s so it’s because of economic illiteracy. They could get mush more in the form of new technologies, equipment, and access to financial resources and so on. The statistics shows this: the economy benefits a lot because new jobs are creating; taxes are being paid; goods are being produced….
June 30th, 2006 at 6:34 am
Unfortunately I completely disagree with you.
Every country has the right to decide in what form to attract foreign investments or don’t attract at all. Perhaps they think that it will be better if the main company itself opens a branch but doesn’t give it to local businessmen. Maybe they are not thinking about their personal interests but believe in special way of development for their country. I insist that even if franchise is good for the US or UK it doesn’t prove that all countries in the world have to use that system. And what will you say if I state that American life style can even do harm to their economies, spoil their traditions and as a result destroy something very important that was developed during centuries. Especially in the sphere of small business!
July 10th, 2006 at 5:03 am
You know… franchise is too easy way to start a business. I suppose that some economists in the governments of the discussing countries can think that if they permit franchising most of newborn companies will use it. As a result businessmen will not develop their own ideas, will miss some specific market trends (as they will consider only general world economic trends). I see the reason not to develop franchising in the same idea as to use teriffs in order to protect infant industries. Government tries to push national business to create something suitable for their country, something more traditional and more attractive for national consumers. Once again: franchise can be too easy. But easy way is not always the best one (All parents can prove this).
So I can agree that for some developing countries with strong national traditions would be better to create their own business systems and not to copy American or European ones.
July 20th, 2006 at 12:31 pm
I absolutely agree that this question is very difficult to answer but it is still possible. The first reason is that this sphere is not highly developed in our country. Not every businessman has a clear and lucid idea what franchising is. The second reason is that our market is not highly developed, there are myriads of opportunities to invest money in and some businessmen try to not to be involved in businesses where they do not feel confident. But I deem it is not going to stay like that forever. Things change, smart and brave people explore unknown. Soon they will make a breakthrough in it and the government will have to pay more attention to franchising legislation and the Small Business Franchise Act will definitely appear in our country in the near future.