Franchise Success Rates & Statistics: What’s Hot for 2023
Looking to become your own boss in 2023 but not sure how successful franchises are? Well, you’re not alone. Zippia finds that there are nearly 674,000 franchise owners in the country. In 2018, a U.S. government report noted that franchises made up $2.3 trillion of economic activity and employed 21 million people.
There are a lot of different franchises out there to invest in. Learn about franchise success rates and which industries might set you up for the best chance to prosper.
There’s no real consensus on exact franchise success statistics out there, but for years franchises, brokers, and other websites have claimed a 90% to 95% success rate for franchisors. However, the International Franchise Association and Small Business Association have asked franchisors and brokers to scrub the internet of those franchise success statistics.
Meanwhile, most recently, Frannet looked at 1,500 businesses that franchised between 2006 and 2010 and was able to provide some insight into franchise success rates. Out of them, about 92% were still open after two years, and 85% were in operation after five. In contrast, the Bureau of Labor Statistics reports that about only 80% of independent businesses stay open after two years.
In truth, the answer to the question “How successful are franchises?” lies in the hands of the company’s business model and the execution by franchisees. Brands with high franchise success rates are the ones that know how to evolve. For example, McDonald’s focused mainly on selling burgers and shakes 30 years ago. Now, they focus more on selling coffee to compete with other drive-thru coffee shops.
Another example is American Family Care, which has been evolving healthcare for more than 40 years now. When the founder saw a need to provide affordable and accessible care that wasn’t in an emergency department, he opened his first urgent care clinic. Now, the brand has added COVID-19 and other virus testing services, telemedicine, and state-of-the-art digital diagnostic testing to provide the best experience for their franchisees and patients.
Thriving Franchise Industries
Investing in a franchise that’s in a flourishing industry can put you one step ahead and help you be a part of those general franchise success rates. So, let’s take a look at some of those industries.
- Quick-Service Restaurants: Food is usually what you think of when the word franchise is thrown around. They are typically expensive to start but can be steady wealth-building businesses.
- Healthcare: The COVID-19 pandemic heightened the importance of accessible and affordable healthcare, as well as the rise in the aging population that will only increase the demand for treatments for decades to come. Franchises like American Family Care offer a variety of services, walk-in appointments, and extended hours; these businesses will thrive even in an economic downturn because healthcare is a necessity.
- Telemedicine: Again, with affordable and accessible healthcare, telehealth provides patients with a convenient and cost-saving method for treatment. A report by Frost & Sullivan found that the telehealth industry will see a compound annual growth rate of 38.2% through 2025. As an American Family Care franchise owner, you can capitalize on this industry, too, by offering telemedicine at your clinic.
- Mailbox Rental and Pack and Ship Stores: IBISWorld notes it as a $3 billion industry. In the days of online shopping and shipping returns, the need for packing and shipping services isn’t going away.
- Fitness: This industry comes with a variety of investment options. From virtual training and home gym equipment to boutique gyms and big box gyms, there is an investment opportunity for every investor level. The industry is growing as people become increasingly aware of the importance of healthy lifestyles.
- Car Services: Almost everyone needs a car to earn a living. As the fallout of the COVID-19 pandemic continues with stocking shortages for vehicles, people will be keeping their cars for longer. This means they’ll turn to mechanic shops to fix them when something is out of tune. Also, cars come with necessary routine maintenance like oil changes, providing a steady stream of income for franchise owners.
- Senior Care and In-Home Care: 10,000 individuals turn 65 every day, according to the U.S. Census Bureau. Americans 65 years and older own 75% of the country’s wealth. That number was 31% 20 years ago, which is why this industry is booming. Seniors are also looking to stay in their homes as long as possible. So, their families are turning to in-home care franchises to help care for them.
What Data Should I Study?
Instead of looking for an overall franchise success rate, study specific franchises’ statistics. You can find most of the information you need by reviewing the franchise disclosure document (FDD). You can key in on two areas for more insight into how well the franchise is performing.
- Number of Units: Listed in Item 20. This stat can illustrate the franchise’s growth by how many new locations have opened and closed in the past three years. It also gives you an idea of how well new franchise owners performed in the previous year. You can ask the franchise why those locations closed.
- Average Sales Per Unit: You can find it in Item 19 of the document. Companies are not required by law to include this information, but most do. This can help you see the past financial health of the brand, but it’s not a promise or guarantee you’ll earn the same profit.
Why Should I Consider an Urgent Care Franchise?
The $29 billion urgent care industry is thriving. In addition, the urgent care franchising industry is projected to grow at a compound annual growth rate of 9.7% over the next five years.
As mentioned above, there is a significant increase in demand for affordable and accessible healthcare. People are looking for on-demand services as well. When they have a nasty cough and a terrible migraine, they want to be able to walk in and see a medical provider quickly. As well as the elderly population wants to avoid emergency departments that can be swarming with viruses and germs.
Start your journey and begin researching how to become a franchise owner with American Family Care. Our business plan capitalizes on multiple urgent care revenue streams with our variety of services, which make us the go-to clinic in communities across the U.S. Apply now and learn more about our franchise success rates.