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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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Franchise Fridays for August 5, 2011: Top Franchise and Small Business News of the Week

The largest restaurant franchise in the world, Subway, is making a healthy change to its menu. Following in the footsteps of nearly every cereal brand, the Subway franchise will begin fortifying its breads with vitamin D and calcium, of which the majority of Americans are reportedly deficient. All of the chain's wheat products, sans the flatbread and English Muffins, will be effected. However, the chain made it clear that the difference will be apparent only in the nutrition facts, not the taste.

5 Ways to Evaluate Your Franchise Options

A great way to go and figure out whether or not the franchise you’re thinking about is the right one for you is to just go into a location and take a look around. Watch how things run. Talk to some of the employees or the customers. Figure out what day to day operations are like. If you have a big problem with the day to day business for any reason then it probably isn’t the right franchise for you. But if you go there and think that the business is great then it’s probably a good fit.

Searching for the Best Franchises for Minorities

Many franchises incentivize minorities to join their systems. As president of the World Franchising Network Rob Bond puts it, these franchises "grease the skids" on behalf of minority candidates because they see value in promoting diversity among their franchisees. On account of a still-languid economy, however, many franchisors' approach has changed significantly in recent years. As Bond explains, “African Americans and Hispanics were being aggressively recruited five years ago to fill vacancies.” But today most franchisors are more concerned with trying to grease the skids for foreign investors with significant piles of investment capital.