Austin Business Journal
June 2, 1997
Franchise firms ride growth wave nationwide
Franchise companies are enjoying strong revenue growth and are expanding their systems, according to the results of an inaugural monthly survey, IFA Franchising Snapshot, released today by the International Franchise Association.
IFA is the world's oldest and largest organization representing the sector.
Median growth for franchised units in a typical company during March was 18.5 percent higher than at the same time last year, while median growth of company-owned units was 14.4 percent above a year ago. The informal survey was conducted among members of the association, whose companies account for more than 80 percent of franchising's annual sales. Fifty companies responded.
Franchising produces more than 40 percent of all U.S. retail purchases, provides employment for some 8 million workers and will generate an estimated $1 trillion for the nation's economy by the year 2000.
"While restaurants are the most visible franchises, the concept spans 65 different industries," says Don DeBolt, president of the IFA. "Franchises offering business services, education and health care are rapidly gaining market share on par with more mature forms of business."
The median unit growth was 11 percent per firm, which reflects aggressive expansion in the franchising sector. The respondents reported creating a total of 1,033 units or 20.6 units per company during the past year.
IFA, which represents both franchisees and franchisers, discovered through the survey that the typical company has nearly 16 years experience with its concept, the median firm offering its first franchise in 1983. One firm reported its entry into franchising 80 years ago.
More than half, 54 percent, of those responding said they provide substantiated earnings claims information. The information normally contained in a disclosure document offered to prospective franchise owners includes a range of potential earnings.
Managing growth ranks first among the challenges franchise companies worry most about, according to the survey.
Finding qualified franchisees was listed as their second-biggest challenge, followed by concerns over recruiting and hiring capable employees.
Obtaining good locations for their new units came next, just ahead of worries over adapting high technology to their operations.
More than 32,000 franchisers, franchisees, suppliers and associated companies are members of the 37-year-old International Franchise Association.