research and studies

An Empirical Evaluation of Conflict in the Franchise System

(Published December, 1998) - It seems there is better market value to a franchise system when franchisees conflict with and engage the franchisor.

A survey instrument of a large group of franchise networks shows a statistical correlation that franchise systems utilizing franchisee conflict and satisfaction at the network level do better. Franchisee–franchisor goal congruence is important to network alliance efficiencies.

Andy Seldon, a franchise lawyer, summed up the work of Spinelli and Birley this way in an interview with Blue MauMau:

"It [the study] shows a very high correlation between the accumulative experiences of franchisees as contrasted with a very limited experience of executive management of franchisors. Their study proves, through vast amounts of economic data to back it up, that companies who fail to enthusiastically embrace that deeper well of know-how, through system planning that is incorporated early on during the growth cycle of the company, fail."

Study can be purchased online in pdf format. Purchase price - $39.

Restaurant chain activity, dispensed weekly for Free.

This is a link to CNN Money's calculator to figure how much your business is worth. The rough calculation isn't specifically for franchises. It isn't very industry specific, but it does give you a general idea of what a general restaurant, retail or high-tech firm might sell for. It is not sure exactly what those categories entail though.

Franchise Business Review is a national franchise market research firm that performs independent surveys of franchisee satisfaction. We examine the critical areas of a franchise system including training & support, operations, franchisor/franchisee relations, financial opportunity, and more. Our survey results deliver the unbiased facts about the overall health of a franchise system direct from today’s franchise owners.

The Franchise 50 Awards – Background Information
The 2007 Franchise 50 – Franchisee Satisfaction Awards have once again exceeded all expectations. Over 300 leading franchise systems, representing over 65,000 franchisees, registered for this year’s Franchise 50 project — which is now the largest survey of franchisee satisfaction ever completed. The end result is an exclusive list of companies that truly represents the best franchise opportunities in the marketplace today.

 The 2007 list of franchises includes:

Wow, the Franchise Foundations website, in keeping with their statement of having information you won't find anywhere else, has just added some fascinating info about the iSold It debacle. Pretty amazing stuff. It's in the "Evaluating Franchise Investments" article, just before Mr. Franchise starts listing his franchise evaluation criteria. 

This is a GREAT website with lots of useful information I haven't found anywhere else. Read the "Franchise Articles II" tab. It has a business reality checklist for evaluating any franchise investment. Below this is an informative article about how Mr. Franchise, Kevin B. Murphy, a franchise attorney, bought his first franchise in 2002 (in the home improvement industry), and his first-hand experiences in starting the franchise from scratch, then re-selling it a year later.

www.FranchiseBrief.com is an online directory of franchise opportunities.

Unlike major franchise directories, www.FranchiseBrief.com is FREE for franchise companies wanting to advertise their concept on this portal.

A survey of Australia's Franchising Sector conducted by Griffith University's Service Industry Research Centre. It is similar to the International Franchise Association's KPMG survey of how important franchising is to the American economy. The survey shows impressive growth in franchising and importance to the Australian economy.

• There are approximately 960 business format franchise systems in Australia in 2006 compared with 850 in 2004 and 700 in 2002.
• The growth rate in franchised units from 2004 to 2006 was 14.6 percent.
• Franchising contributed 14 percent to Australia’s Gross Domestic Product (GDP) in 2005.

Note: The survey is a 79 page report in pdf format. The link is slow to upload in North America.

The World Franchise Council's tries to keep track of franchise units by country. Their list is a work-in-process. Numbers are estimated and are quite soft in many cases. For example, it is falsely stated here that Mexico has 462,000 franchise units, making it the second largest market in the world. This is most likely a typographical error, since elsewhere on their website Mexico is shown to have 50,000. China is stated to have 120,000 but that is most likely a definitional problem of what a business-format franchise is.

According to the WFC, the U.S. has roughly 770,000 business-format franchise units.

Official statement in 2005 from the IFA asking its members not to use the 90% success rate of a franchise versus an independent from the Department of Commerce. IFA President Matthew Shay says the rate is "old and no longer valid".