August 2, 2011

Franchise Industry Facts

Franchising is BIG.

In the U.S., franchising is big business. Last year, there were more than 765,700 franchises — with 7.6 million employees — operating in the U.S., according to the International Franchise Association. In total, those franchises had an output of $706.6 billion. Those numbers were up only slightly from 2009, but this year’s growth is expected to be more significant. The association estimates that the number of franchise establishments and employees will increase by 2.5 percent this year, while output is expected to jump by about 4.7 percent to $739.9 billion.

Right now, the biggest hurdle for potential franchisees is finding the cash to get started.

Franchisors typically require franchisees to put down money right away and have a particular amount at their disposal. Those numbers can vary considerably; Lawn Doctor, for example, requires $80,000 to get started and $40,000 in assets, while opening a Max Muscle store can take anywhere from $140,000 to nearly $300,000. Franchisees for Pita Pit, an Idaho-based quick restaurant chain, need to have about $250,000 in assets. Right at Home, an Omaha-based senior care franchise, has a minimum requirement of $200,000 in net worth and $100,000 in liquid assets.

Last year, lending to franchise businesses was down somewhere between 40 percent and 50 percent, according to an International Franchise Association report.

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