Of approximately 34,400 franchised outlets opened in 2014, 79.4% belonged to systems that began franchising in 2005 or earlier. However, systems that began franchising in 2006 to the present had net outlet growth of 20%.
This comparison is based on the year that each of the 2,264 franchise systems began offering franchises. The median year of 2006 was used as the division point. There are 1,080 systems in the category of systems that began franchising in 2006 to present day, and 1,184 systems that began in 2005 or earlier.
One of the interesting results of this study reveals that 79.4% of the total number of new outlets opened belonged to systems that began franchising in 2005 or earlier. This group also had more than triple the amount of outlets that had signed but not yet opened, with 18,166 compared to 5,905 for the 2006 to Present group. However, those that began franchising in 2006 or later had 20% net growth versus 1% for systems that began franchising in 2005 or earlier.
The full report includes comparatives in average initial investment, Item 19 FPR disclosure, and Net Growth.
We have completed a study on the changes in Ongoing Fees in the franchise industry using our data from 2013 – 2016 to publish the report.
A Franchise Disclosure Document (“FDD”) presents key components of the franchise program including the obligations of the franchisor and franchisees.
As franchise system development becomes more competitive franchise systems are employing a new strategy to grow their brand and increase franchise sales.
The composition of the franchise investment differs in key areas such as: franchise fees, royalty rates, territory protections and Item 19 disclosures.
Data has become essential to having a successful franchise development team. Those that maximize the power of data will sell more franchises.
When reviewing an FDD, we always keep our eyes out for any errors. The error that is the most troublesome for us is when we see Item 20 errors.