Top Franchise Industry Statistics and Facts
Franchises offer prospective entrepreneurs many benefits, including access to marketing, training, and an existing established brand. For these reasons, they’re becoming increasingly popular. Entrepreneurs who don’t want to build businesses from scratch are turning to them as a welcome alternative.
Follow us as we take a look at some of the most informative general franchise statistics from the industry.
Key Franchise Facts for 2023 - Editor’s Choice
- McDonald’s is the largest franchise in the world, with more than $23 billion in annual revenue in 2021.
- With nearly 43,000 individual restaurants, Subway has the most outlets of any global franchise.
- There are more than 750,000 franchise establishments in the US alone.
- 7.49 million US employees work in franchise businesses.
- The economic output of the US franchise industry is valued at $670 billion.
- 10.5% of all businesses in the US are franchises.
- McDonald’s franchises require a hefty initial investment of $1 million to $2.2 million.
- The typical royalty percentage of a franchise is 5%-6% of the gross revenue.
Global Franchise Statistics
McDonald’s is the largest franchise in the world, with $112 billion in global sales in 2021.
Other large franchises include KFC, 7-Eleven, Burger King, and Subway.
With nearly 43,000 individual restaurants, Subway has the most outlets of any global franchise.
While Subway got started in 1965, more than 11 years after McDonald's, it has been able to expand more rapidly. From its headquarters in Miami Springs, Florida, it now has approximately 43,000 outlets across the globe.
7-Eleven has over 55,000 outlets across 16 countries.
McDonald’s might be the biggest franchise in the world, but 7-Eleven has been around longer - since 1927. The convenience store chain now has more than 10,000 outlets in the US alone.
39% of outlets of the top 200 US food franchises are international.
More franchises than ever are expanding from the US overseas.
The only two franchises in the top 20 whose headquarters are not in the US are Tim Hortons and CNHLS.
Canada’s Tim Hortons comes in at position 18, while CNHLS, also known as Wallace Foods in China, comes in at number 19.
As of 2019, 93% of McDonald’s restaurants were franchises.
In 2019, McDonald's reported that 36,059 of its restaurants (out of a total of 38,695) were franchises. This high rate is still below McDonald’s target of making 95% of its restaurants franchises.
There are approximately 4,500 franchises operating in China.
According to this franchise statistic from the Ministry of Commerce, there are more than 4,368 registered franchisors in China as of 2019, with more than 4,500 unofficially in operation. Experts estimate that there are over 400,000 franchise locations across the country.
India has nearly 200,000 operating franchise units.
National and regional brands comprise 84% of the franchising industry in India. Franchising in India is now believed to be worth more than $50.4 billion, growing at a yearly rate of 30%-35%.
Statistics on the Leading Franchises in the US
There are more than 750,000 franchise establishments in the US alone.
At the last count, there were an estimated 753,770 franchise locations in the US.
The economic output of the US franchise industry is valued at $670 billion.
To put that in perspective, franchises account for roughly 2.5% of the country’s total economic output in 2022.
7.49 million US employees work in franchise businesses.
The franchise economic model is proving successful, with more workers than ever signing up to be a part of it. Facts about franchising show that franchises currently employ around 5% of the US labor force.
The largest segment of the franchising industry in the US is fast-food restaurants, generating $241 billion in total economic output.
When you add up all of the revenue of “quick service” franchise restaurants in the US, the total comes to more than a quarter of a trillion dollars.
10.5% of all businesses in the US are franchises.
Franchising facts from the US Census Bureau show that limited-service restaurants make up the lion’s share of franchises, followed by car dealers, gas stations, and convenience stores.
Restaurant franchise owners earn an average of $82,000 per year.
However, this can be deceptive, as the distribution of income is uneven. Around 51.5% earn profits of less than $50,000, with a small fraction making more than $250,000, pushing the average up.
There are more than 194,395 quick-service restaurant franchises in the US.
Quick-service restaurant franchises are the most common in America. They include fast-food restaurants, cafeterias, ice cream parlors, pizza-delivery establishments, and some carryout shops, such as sandwich shops.
3,000 is the number of franchises in the US.
Franchises cover more than 300 business categories: everything from fast food to car and equipment rental.
The US has more than 70 of the world’s top 100 franchises.
America dominates the global franchise scene, with countries like Canada, Australia, China, and Brazil a long way behind.
Pizza Hut has the most units of any pizza chain in the US: more than 7,300.
The total number of franchises in the US that are pizza-related is 77,724, meaning that Pizza Hut franchisees own nearly 10% of them. With a figure of 7,306, Pizza Hut owns an impressive 1,180 more than Domino’s.
Domino’s Pizza generated $7 billion in 2019.
Pizza Hut might have more outlets, but that doesn’t seem to be translating directly into bigger profits. Data from 2019 show that Domino’s Pizza leads the pack at $7.04 billion in sales, with Pizza Hut and Little Caesars coming in second and third, respectively.
The sports franchise market size in the US is $34 billion.
According to some sports franchise statistics provided by IBISWorld, Dallas Cowboys, Madison Square Garden Sports, New York Yankees, and Los Angeles Lakers are among the sports franchises with the biggest market share in the US.
There are a total of 969 businesses in the US sports franchise industry.
None of these businesses have a market share exceeding 5%.
Statistics on Franchise Investment
McDonald’s franchises require a hefty initial investment of $1 million to $2.2 million.
McDonald’s asks for a $45,000 upfront franchise fee and a 4% of gross sales monthly service charge. However, you’ll pay significantly more than this to get your restaurant off the ground – possibly up to $2.2 million according to some analysts.
It costs just $10,000 to set up a Chick-fil-A franchise.
Anyone who wants to set up a Chick-fil-A in Canada should prepare to pay 15,000 Canadian dollars or $10,000. The quick-service restaurant is highly selective and requires candidates to show proven business acumen, an entrepreneurial spirit, and evidence of personal financial integrity.
More than 300 companies begin franchising operations each year.
Hundreds of new companies experiment with launching franchises every year. However, only a handful are successful long-term.
The typical length of a franchise agreement is 10 or 20 years.
The franchise contract spells out the responsibilities of both the franchisor and the franchisee for the period, as well as the conditions under which the franchise can operate.
The typical royalty percentage of a franchise is 5%-6% of the gross revenue.
Franchisors, however, may take fees in the range of 1%-50%. Some also charge fixed fees, regardless of volumes, but this is rarer. Most fees go toward common marketing drives.
Smoothie King has a failure rate of 28%.
Some franchises, such as Smoothie King, have high default rates on their initial loans. Some estimates put these as high as 28%.
Quick Facts About the Origins of Modern Franchising
The first modern-day franchise was set up in 1891.
Canadian-American Martha Matilda Harper was the first to set up a franchise in 1891 when she began allowing entrepreneurs to set up their own Harper Method Shops. She included many modern franchising elements, such as branded products, advertising, group insurance, and field visits.
General Motors sold its first franchise in 1898.
The giant automaker sold a franchise to William Metzger of Detroit.
Anytime Fitness, one of the most well-known sports franchises in the US, was the first franchise to have a presence on all seven continents.
Anytime Fitness managed to achieve this feat by opening a franchise on the Magellan Explorer cruise ship, which offers tours of the Antarctic coast. Guests aboard the vessel have access to Anytime Fitness’s training facilities 24 hours a day, according to a company spokesperson.
The list of franchise industry statistics and facts we’ve compiled here shows that franchising is a growing segment, despite the drawdown during the pandemic.
Because the business model offers a way for entrepreneurs to get their business off the ground quickly, it seems unlikely that the concept will disappear anytime soon.
What percentage of businesses are franchises?
Around 10% of businesses are franchises, according to the US Census Bureau, which canvassed companies from more than 295 industries.
How profitable is owning a franchise?
Franchises can be exceptionally profitable. However, the biggest gains are reserved for a small percentage of franchise owners: Approximately 7% of them earn more than $250,000, while 51% earn less than $50,000.
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