Is a Franchise a Good Investment?

The short answer is “yes!” and there’s a growing body of research that agrees.

First, here are some core concepts that make franchising great:

  • The independence of running your own business, with the continual support and expertise of an established, successful brand.

  • Learning from peers who have already found success in the brand.

  • We’ll teach you what you need to know--minimal (or no) industry experience is necessary.

  • Franchises historically have a higher rate of success than new start-up businesses.

You don’t have to take our word for it--let’s look at the latest report on franchising. In September 2021, the International Franchise Association (IFA) and Oxford Economics released a report called “The Value of Franchising.” The report reveals that not only is franchising great for business owners, it also comes with major benefits for employees and the economy as a whole.

Franchising is a key path to entrepreneurship

One of the most powerful findings of the new report is the fact that franchising creates successful business owners out of people who would not have otherwise had the opportunity. In fact, 32% of respondents surveyed in the study said they would not own a business without franchising. The data showed that franchising was even more critical to becoming a business owner for first-time owners and women.

Overall, franchising is great news for people who didn’t think they could own a business. The IFA’s recent report also found that people of color are represented far more within franchising, with about 26% of franchises owned by people of color compared to 17% of independent businesses generally. Furthermore, “Black-owned franchises earn 2.2 times more than Black-owned independent businesses on average.” We also know that veterans are about 7% of the population, but they make up about 14% of franchisees.

No matter who you are, it’s good news that franchises “report sales 1.8 times as large as comparable non-franchise establishments, on average.”

Plus, a study from Palm Beach Atlantic University’s Rinker School of Business shows that "franchise businesses sold at a 1.5 times higher price than non-franchise businesses," so you can rest assured that your succession plan is solid.

Franchises provide more value to their communities

Small businesses are frequently thought of as the backbone of communities, but many people don’t realize just how much more value franchises bring compared to nonfranchised businesses. The IFA’s study confirms that franchise businesses hire and train more locals instead of bringing in workers from other regions. They provide 2.3 times as many jobs compared to non-franchise counterparts. Franchises also tend to keep resources in a community through their supply chain, with more than a third (36%) of franchises purchasing at least 25% of required goods locally.

Franchises provide better jobs than similar non-franchised businesses

In addition to offering franchise owners success and growth, the success of the franchise model allows business owners to share their success with employees. The IFA’s study shows that franchises pay between 2.2 – 3.4% higher wages than similar nonfranchises, and they offer health insurance to 65% of franchise workers, compared to just 51% of other small businesses. Franchises also offer paid holiday, vacation, and sick leave time at a consistently higher rate.

Ready to learn more about franchising?

Our Franchising U blog series will walk you through everything you need to know to get started. Once you’re ready to get going, fill out our contact form and take the first step to becoming a business owner