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Franchising in America

Going Beyond the Golden Arches

While that’s good news for McDonald’s, it’s not the correct answer because McDonald’s is a food service and the food service industry is merely one of more than 75 primary industries that uses franchising as its method of distribution. People are often shocked to hear that in addition to McDonald’s there are over 3,000 more franchise opportunities in the Untied States alone. Thousands more exist in other parts of the world.

Beyond burgers

While Quick Service Restaurants have dominated franchising since the 1950s, when the concept of franchising became popular in America, non-food franchise opportunities have grown in significance. According to Tom Portesy, president of MFV Expositions, the world’s largest provider of franchise expos, the biggest change in franchising in the last 30 years is the explosion of non-food concepts.

“Franchising covers all the major industries today,” says Portesy, “including child care, pet care, senior care and business-to-business. If you think of a business, it’s probably already franchised.”

Another question that stumps the masses is the cost of buying a franchise. People seem to believe only millionaires become franchisees, but through the years franchising has become less expensive. Opening a McDonald’s can cost a million or more, but many service franchises sell for less than $10,000.

A lending hand

“Buying any business requires some money,” continues Portesy, “but today it’s not as much money as most people think. Banks, leasing companies and the U.S. Small Business Administration all support franchising because of its successful track record.” Most people who buy franchises depend on lenders for some assistance. Today, many franchisors are also lenders.

One thing that hasn’t changed about franchising is that successful franchises depend on proven operating systems. While McDonald’s figured out how to turn a hamburger into a goldmine, Midas figured out how to do the same with a muffler. A franchisor creates a system to sell a product or service and by following the system franchisees build successful businesses.

Currently in America, according to the International Franchise Association, there are more than 800,000 franchised outlets providing 9 million jobs and producing more than $868 billion of output. Franchises provided more jobs in 2016, says PricewaterhouseCoopers, than all manufacturers of durable goods including computers, cars, and planes.

Franchising isn’t for everyone, but anyone who’s thinking about buying a business to build wealth must consider franchising. McDonald’s may not have an opportunity for you, but McDonald’s isn’t the only franchise in town today.

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