Industry Facts & Questions
- There are approximately 1,500 different Franchisors in the United States.
- More than 780,794 businesses are franchised in the United States.
- The franchising industry and businesses employ nearly 9,000,000 in the United States.
- The franchise industry accounts for 40% of all retail sales in the United States.
- A new franchise business opens approximately every 8 minutes, every business day.
- Approximately 1 out of every 12 businesses in the United States is a franchise business.
- Average of royalties paid by Franchisees range from 3% to 6% of monthly gross sales.
- Most franchise companies have fewer than 100 units.
- The average length of a typical franchise contract is 10 years.
- The top franchise industry is fast foods.
- Job growth in franchising in 2015 is up 2.9%.
- Franchising by those 55 and older is up 40% since 2007.
Top 10 Fastest New Growing Franchises for 2015
As reported by Entrepreneur Magazine:
- Subway - 42,220 units
- Dunkin Donuts - 10,933 units
- Cruise Planners - 1,757 units
- Jimmy John's - 2,043 units
- Vanguard Cleaning Systems - 2,946 units
- Great Clips - 3,518 units
- Taco Bell - 5,157 units
- Bricks 4 Kidz - 606 units
- McDonald's - 28,994 units
- Sport Clips - 1,269 units
2015 Top Franchises (Entrepreneur Magazine)
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Federal Trade Commission FAQs
1. What presale disclosure documents must be given to me?
The Federal Trade Commissions’ Rule on franchising requires franchisors and business opportunity sellers to provide to prospective purchasers a Disclosure Document. These are not kept on file by the Federal Trade Commission. However, federal law as well as state franchise laws in 16 states and state business opportunity laws in 26 states require registration with a designated state agency. As a result, the Disclosure Documents may be obtainable from those particular state agencies. They are also obtainable with respect to all 50 states by private companies. For a reference of one of these companies, contact attorney David L. Steinberg.
2. How can I find out if a franchise company has complaints against it from other Franchisees?
This is a good question, but unfortunately there is no federal or state agency that will necessarily keep a “list of complaints”. A prospective franchisee can contact the Federal Trade Commission in Washington, D.C., or the State Attorney General Office in the state in which the prospective franchisee desires to operate. If there has been litigation or arbitration filed against a franchisor, it must be listed in Item #3 of the Franchise Disclosure Document. Under the amendment to the Federal Trade Commission Rule, effective July, 2008, franchisors must disclose franchisor initiated lawsuits against franchisees during the last fiscal year with respect to any issue involving the franchise relationship. In addition, there is no substitute for checking the track record of a franchisor business opportunity seller by personally talking to at least ten prior purchasers. This is why the Federal Trade Commission requires companies to give consumers a list of the names, addresses and telephone numbers of all franchisees. Prospective franchisees should interview prior purchasers about their experiences and ask them to verify that they are not being paid to provide a favorable review.
3. How does a prospective Franchisee know what is to be included in the Franchise Disclosure Document?
The Federal Trade Commission rule on franchising, as published in the Code of Federal Regulations, specifically states what must be disclosed and provided to prospective franchisees in the Franchise Disclosure Document. In addition 16 states have statues regulating the offer and sale of franchises.
Sources of Franchise Information
- Annual January issue of Entrepreneur Magazine
- Michigan Attorney General, Department of Consumer Protection (517) 373-7117
- International Franchise Association (202) 628-8000
- Trade shows
- Public library
- Franchise Opportunities Guide
- Franchise marketing companies
- The Federal Trade Commission.