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Posted on Nov 18, 2010

New Government Data Will Measure the Economic Impact of Franchising

According to the International Franchise Association (IFA), newly released data in the 2007 Economic Census Franchise Report will help quantify the economic impact of franchising. “Determining the economic impact of franchising is a key strategic priority for the IFA in our efforts to showcase the importance of franchising to the U.S. economy,” said Ken Walker, IFA chairman as well as chairman and CEO of Driven Brands.

According to Walker, the report is the result of the U.S. Census Bureau's inclusion of questions on franchising in the economic census for select industries. The report collected information from businesses with paid employees in nearly 300 industries. Data shows national-level estimates by industry sector of franchise establishments, employment in franchised businesses, and payroll and sales from franchised businesses. Through these reports, the IFA hopes to gain a better understanding of the role of franchising in the free enterprise system, as well as its contributions to the U.S. economy and the variety of paths franchising provides for entrepreneurs to become business owners.

“Franchising plays a vital role in our nation’s economy and drives new job creation,” said Walker. “This new report represents the first comprehensive ‘census of franchising’ by the government and demonstrates that franchise businesses provide many options for entrepreneurs who may be considering starting a franchise business.”

The data will be included in the third volume of The Economic Impact of Franchised Businesses report, which is scheduled for release in February 2011. As in its previous incarnations, Volume 3 of the franchised business census report will also include estimates of the indirect economic impact of franchising due to the products and services that franchise systems purchase from other businesses. Volume 3 will include measures of both GDP (Gross Domestic Product) and economic output. Data in the report will be broken out by line of business, by state and by congressional district.

Readers may find a copy of the 2007 Economic Census Franchise Report at the U.S. Census Bureau website.

How do you think the Franchise Economic Impact report will help private investors considering a franchise purchase? Is macro data like this even relevant for potential franchisees or is it simply an academic exercise for consumption by economists and policymakers? Please leave a comment below!

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