2020 United States of Franchising
In the past 12 months, millions of people have visited FranchiseHelp.com, the internet’s leading resource on becoming a franchisee. Given the sheer volume of Americans seeking information of franchising from us, we’re in a unique position to look at how this breaks down across the nation.
At the highest level, there are a few conclusions that are impossible to ignore:
- The South is the center of franchising in the U.S. The three most interested states (Louisiana, Georgia, and Mississippi) all have SEC football teams.
- Franchising is not particularly regional outside of the South. If you look at the Northeast and West, you’ll see bordering states display quite different levels of interest. For example, New York and Vermont are noticeably different in their franchising numbers.
- Comparing 2019 and 2020 reveals just how powerful the global pandemic was on the franchising industry, particularly states with high tourism industries like Hawaii and Colorado.
This analysis represents two different types of interest in franchises, relative and absolute interest. For the purposes of simplification, any reference to simple “interest” is a reference to relative interest unless otherwise noted.
Absolute interest is simply a breakdown of the total number of leads that FranchiseHelp has generated irrespective of the population of the geography in question. This tends to naturally skew towards states with higher populations.
Relative interest controls for the size of the state by comparing absolute interest to the state’s population size. The formula looks like (Percentage of Total Leads – Percentage of U.S. Population) / Percentage of U.S. Population.
For example, Louisiana accounted for 2.2% of the leads generated in 2020, but their population is only 1.4% of the total US population. The relative interest in franchising for Louisiana is 54.1% = (2.2% - 1.4%) / 1.4%, because they requested relatively more franchising information than you would expect based on their population size.
On the other hand California accounts for 9.0% of the leads, and 12.0% of the population. The relative interest for California is -25.0%, because they requested relatively less franchising information than their population size.
And so, without further ado, here’s the 2020 United States of Franchising.
State by State
As usual, franchising continues to dominate the South. If you look at the Northeast and West, you’ll see bordering states display quite different levels of interest. For example, New York is highly interested in franchising, whereas its crunchy neighbor Vermont is uninterested. Maybe it has something to do with their famous no billboards.
Here is each state’s relative interest in owning a franchise, as shown in the map above:
As we mentioned above, interest in franchising in the U.S. is dominated by the South (does DC count as the South? Sure feels like it walking around there!), specifically Georgia, Louisiana and Mississippi. It is interesting to note that only 16 out of 50 states have a positive relative interest.
Next up is absolute interest:
Texas shot up to the top here, with DC falling off the map completely. Mississippi dropped down significantly as well in absolute interest. It makes sense intuitively that when you remove the control for population size, big states like Texas, California, and New York gain a lot of ground. And it’s worth noting that just because a state has lower relative interest doesn’t mean it’s a franchising dead zone. There’s plenty of interested individuals in the great big state of California.
Because we’re data junkies, we went ahead and ran the same data on the zip code level. There are a few zip codes in the US with insanely high relative interest in franchising! For instance the good people of Houston, LA, New York, and Orlando are all more than 600% as interested in the average American in opening a franchise.
Here are the top 10 zip codes interested in franchising in 2020 (ranked by relative interest, for zip codes with at least 20,000 residents)
Why is Elkridge, MD #1 on our list? It could be that it’s the confluence of three counties. Or maybe that Elkridge's main corridor is defined by Washington Boulevard, a historical road traveled by George Washington and known for Dead Man's Curve during early automotive travel.
Next, considering 2020 was such an economic anomaly, we wanted to do a side by side between 2020 and 2019, as an indicator of just how powerful the global pandemic was on the franchising industry.
It’s fascinating to see that the two biggest drops in rank were Colorado and Hawaii. Our guess is because of quarantine, travel restrictions and business closures in the hospitality sector, those two states suffered greatly during the pandemic.
If you’re a member of the media and interested in the full data set or other information regarding the United States of Franchising, submit a request here and we’ll get back to you ASAP.
Running a Franchise While Keeping Your Career!
Something that is possible with franchise ownership that may not always work with a start-up business is the ability to maintain your career while you run your business. Although many franchisees rely on their business unit as the basis of their revenue stream, there are more people interested in buying a franchise to generate a second source of income. A flexible franchise option makes this a possibility and can afford some opportunities that other franchises cannot.
Franchise Financing Options
Recently I've received a few questions from our users about what their options are when it comes to financing their franchise. So I figured it might be a good idea to put together a quick post outlining some of the options out there for financing your new franchise.
Top Five Least Expensive Franchises
Franchise opportunities aren’t just for the well-funded; many affordable franchises cost under $25,000. Franchises start-up costs are approximate and may change, but here are five of the cheapest franchise opportunities around: