What is franchising, what is its place in the USA and does it have a future? Read on to find out. If you need to write an essay on a similar topic or any other, we recommend placing an order on essaylook.com/write-my-essay.
USA Franchising: Statistics and Analysis
Franchising is a popular phenomenon nowadays, since it benefits for both sides: brands get spread on the larger territories, and the local business people get the support and marketing from a large firm. No wonder that more and more firms are offering this service and more and more business people get use of it. This time we will focus on the development of this from of business in the USA.
Criteria of Evaluation
The volume of the spread of franchising may be evaluated based on the following features:
- Gross turnover of the firms;
- Number of the agreements;
- Number of the employees.
According to the criteria mentioned, the leading positions in the world are held by the USA, Western European countries, and China.
In its modern understanding, franchising has been introduced in the USA in the second half of 19th century. The inventor of this method can be considered Isaac Zinger, the worldwide known founder of the company producing sewing machines. Later, “General Motors” created an effective network of enterprises based on the same principles. The same way was chosen by “Rexall” to develop a network of pharmacies.
Today’s Situation in the USA
Today the volumes of the sales according to the system of franchising in the USA is around US$1trillion per year, and 40% of the retail sales are connected with it. This means that it is the leading form of entrepreneurship in the USA and every year its popularity grows.
A Constant Growth
From 1980 to 2015, the number of the franchising points has increased more than on 150%, with more than 7% growth every year. American franchising, its principles and standards, are the etalon for the whole world. The temps of its growth not only in the USA, but in the whole world are so significant, that the House Small Business Committee defined it as the kind of American export, which is the most developing one.
Today more than 500 American companies have more than 50 thousand franchising points around the globe, and this number becomes bigger every day. More and more franchisers are aiming at the global market, and more than the half franchisee that has appeared during the last 10 years are located outside the USA. The annual market turnover is evaluated as US$2.95 trillion.
Having passed the period of the global recession in 2008-2012, the USA are in the state of economic growth. The biggest part of the GDP corresponds to the sector of services and industry. Occupation in the franchising companies has increased on 2.6% in 2015 in comparison to 2014. GDP in the sector has increased to US$494 billion in 2015.
There are also changes in the geography of location of the franchising points of American companies. Such giants as McDonald’s, KFC, Dunkin Donuts are more focused on opening points outside the country, shortening the number of points in the USA. For example, in 2014, McDonald’s has opened 59 new points in the USA ad 718 in other countries. The most of attention of the company is being paid to the states of the Middle East, Asia, and Africa.
Here are some specific numbers:
- In 2015, the highest part of employment was observed in the sector of fast-food restaurants.
- The perspective sectors for employment in 2015 were: fast-food restaurants (38%), business services (11%), hotels (8%), and personnel services (8%).
- According to the annual survey by Franchise Business Review in 2015, the most popular branches were food sector, fitness, services for kids, and services for looking after the elderly people. Also, in the USA there is a significant increase in the services such as care after elderly people, landsсaping, and healthy food.
As far as we can see, the USA remains the leader in the global sector of the franchising business based on the level of income and temps of growth in the sector. Thus, it is the actual form of business that is yet to develop and spread even more in the nearest future.