I have always been fascinated with franchises: on the one hand they represent the entrepreneural spirit given shape, structure and support — for a hefty fee of course — but on the other they represent the march of the formulaic, unimaginative and monochromatic across the global landscape.
In the big picture, I lean toward the former interpretation, though am cognizant and wary of the realities of the latter.
Anyway, it's going well: the top 200 U.S.-based franchises did $390.5 billion in sales worldwide in 2004, according to a survey by Franchise Times magazine, a nearly 20 percent increase from the year before. Those sales were generated at some 390,000 franchise units across the globe, 82 percent of which were operated by franchisees.
McDonald's occupies the No. 1 spot, a position it's held onto since the first list in 1999. Rounding out the top five are 7-Eleven, Carlson Wagonlit Travel, Ace Hardware and KFC. Burger King is No. 6, with fellow burger rival, Wendy's, at No. 8. Restaurants make up 42 percent of the Top 200 chains, with retail second at 21 percent, and lodging third at 14 percent.
Article comments
1 - John Bil
Some franchises, like McDonalds, porvide real value for your money. If you are approved for a McDonalds, your set for life. Most are bus/opp ripoffs. The good ones are few and far apart. I looked into a UPS mailbox place franchise, and they wouldn't give me any info on what the average return is. The shady ones are where they claim you will make thousands or millions with their franchise; and then after you spend tens of thousands, you get nothing of any real value.
2 - Eric Olsen
that's certainly true, John. There was a mailbox/package place in the local shopping center that didn't make it.
My comment at the beginning was more geared toward the top 200, which you would assume to be basically legit, and the impact they have
3 - DJRadiohead
Good post, Eric. There is a glass half empty-half full relationship with franchises.
4 - Victor Lana
Eric,
Interesting! I've always thought that this is a great possibility for people. Franchise sounds so promising. I believe though that the expenditure prior to start-up is at least $250,000 for places like Subway or Wendy's. I actually heard this from someone who attempted to start one.
I'd liek to know if that's true or not.
5 - Eric Olsen
thanks DJR and Victor - yes, I am sure those figures are in the ballpark, Victor. It may be more than that for some, depending on inventory and who owns the building and all of that
6 - Mike Gomez
Franchise businesses are better than starting one from scratch because they have a higher rate of success.