Ever wonder about certain franchise industry stats? For example, which franchise sectors are dominant? Which franchise concepts have grown while others have decreased? How about the range of franchise investments?
These questions are often asked by prospective franchisees and those of us who work in the franchise industry. We should also expect entrepreneurs considering building and launching a new franchise would find these stats useful.
Here are a few highlights from our analysis of the following 10 major franchise sectors.
The leading Franchise Sectors by percentage of unit growth from 2015 to 2020:
- Personal Services brands increased by 30%. This includes the homecare, health and fitness and beauty care categories.
- QSR brands grew by 17%. Quick Service Restaurants, commonly referred to as Fast Food, is the largest franchise sector and includes hamburger, Pizza and Chicken concepts and other foods.
- Real Estate sector grew by 15% which includes agents and brokers.
- Commercial and Residential Services brands increased 14%. This sector includes a full range of home services from plumbing to lawn care, cleaning services for office buildings and residential exterior and interior painting.
The Franchise Sectors that had 0 or negative unit growth from 2015 to 2020:
The Automotive, Business Services and Full-Service restaurant sectors had no growth for the five-year period.
10 Franchise Categories with highest percentage growth and minimum of 500 franchise units from 2015 to 2019:
- Property Management: 746
- Education, Entertainment, Sports Training: 2772
- Pest Control: 1689
- Technology: 620
- Pharmacy: 7267
- Wellness and Nutrition: 748
- Security: 7052
- Outdoor Property Management: 1295
- Grocery Facility: 2680
- Beauty and Haircare: 4874
The size of franchise systems is dominated by smaller brands. Although the large franchise brands receive most of the attention, it’s the smaller and often less recognized franchises that dominate the industry.
100 units or fewer: 73%
50 units or fewer: 60%
25 units or fewer: 47%
Franchise Initial Investment
We broke down the startup franchise investment by sector for Emerging brands (startups and less than 50 units) from 2015 to 2019 although there were slight increases in the higher investment categories the low investments changed very little. This is reflective of the fact that a low investment franchise is less costly to build and launch and attracts a larger universe of potential franchisees.
Franchise initial Investment Distribution
|$250,000 50 $500,000||25%|
|$500,00 to $750,000||13%|
|$750,000 to $1,000,000||16%|
|$1,000,000 to $2,000,000||7%|
For existing franchisors, entrepreneurs contemplating franchising and existing business or individuals considering investing in a franchise opportunity, it’s important to know how existing franchise sectors and individual franchise categories are performing.