An American Icon

Jobs and Entrepreneurship


Franchising can be counted on to create new jobs every time a franchise expands or adds a new location, which, in our ever-growing retail and service landscape, is often. "Big business has not been creating jobs," DeBolt asserts. "Small business and franchising have created jobs. Franchising is really small business at its best."

In fact, franchising affects our economy and everyday lives more than we realize, according to a study released by the IFA in March 2004, which measured the direct and indirect impact of franchise businesses. The study showed that franchises directly employed almost 9.8 million people, (7.4 percent of all private-sector jobs)-as many people that year as all manufacturers of durable goods. Franchising also supplied a payroll of $229.1 billion (5 percent of all private-sector payrolls) in 2001.

Because franchising doesn't exist in a vacuum, it's also a boost to overall economic well-being. The study revealed that the total economic impact of franchising (which includes what occurs both in and because of franchises) resulted in more than 18.1 million jobs (13.7 percent of all private-sector jobs) and $506.6 billion in payroll (11.1 percent of all private-sector payroll). In addition, the study found that economic activity in franchise businesses generated "about the same amount of additional activity in nonfranchise businesses."


Franchising has created opportunities for job-seekers and business-seekers alike. Men and women young and old, high-ranking executives and those armed only with the dream of financial independence have entered the realm of franchise ownership. Those who have an entrepreneurial yearning but also appreciate the benefits of running a business with a support system in place have found a haven in franchising, and have planted their roots there. In fact, franchising, to a degree, is a brain drain on corporate America. "Corporate America's going to have kids fresh out of school who will work for a little bit of money, but they're not going to have peo-ple who have 20 or 30 years of experience and really know how to run a business," says franchise consultant George Knauf. "[Those former execs] are going to be sitting in franchises or independent businesses. They're going to be running their own operations and gaining the benefit of their hard work instead of giving it away."

And there are plenty of opportunities: Of the companies that comprise the franchise population, more than 90 percent of their total units are owned by franchisees, according to our 2005 Franchise 500®.

Going the franchise route can also give prospective franchisees assurance, due to stringent disclosure requirements. "The beautiful thing about it," says DeBolt, "is there's so much opportunity for people to investigate the investment in a way they couldn't if they were starting their own business, or buying a business that isn't a franchise." Being a franchise owner is another important avenue for achieving the American dream.

Up, Up and Away

Franchising has come a long way in terms of the overall number of franchises sold each year, and this year, things are looking up. So what's in store for the future? Stay tuned.

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This article was originally published in the January 2005 print edition of Entrepreneur with the headline: An American Icon.

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