Launching a new independent business is a dangerous undertaking, especially in today's economy, when the failure rate is at a near-record high. But running a franchise enterprise is, by comparison, almost a sure bet, according to a Department of Commerce study. The DOC found the rate for discontinued franchises was a mere 4% a year.
In its annual franchise survey, the DOC estimated that in 1982 some 34% of all U.S. retail sales will go to franchised establishments. It also found that the number of franchisors providing business opportunities for Americans has nearly doubled, to 1,584, in the past decade. In all, there are currently an estimted 466,000 franchise outlets in the United States.
The fastest-growing franchisors are those that provide operators with a complete business format. Over the past 10 years, the DOC says, revenues for these operations, which include fast-food establishments and muffler shops, grew 225%. By comparison, product and trade-name franchisors, such as car dealerships and gas stations, that allow latitude in how a business is run, saw growth of only 150%.
Many Americans aspire to owning their own businesses, and "franchising offers an opportunity for people with limited capital and experience," notes Andrew Kostecka, a franchise specialist at the DOC. Over the next few years, Kostecka expects a bright franchising future in several rapidly growing areas, including computerized services, ethnic food restaurants, real estate agencies, and professional services such as dental and legal offices