IFA to Study Economic Impact of Franchising

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IFA to Study Economic Impact of Franchising

WASHINGTON -- The International Franchise Association (IFA) Educational Foundation said it would conduct a research study to document the economic impact of thousands of franchised businesses on the U.S. economy. The foundation has engaged PricewaterhouseCoopers LLP to carry out the 9-month research project.

"Most people probably think of fast food restaurants like McDonald's and Wendy's when they think of franchises, but there are many more types of franchises that touch consumers every day from auto repair to maid services pet care, lodging, tax preparation and computer services," said foundation chairman Dick Rennick, who is chief executive of American Leak Detection Inc. "When you add up all these thousands of small businesses in every community across the country, and you include their payrolls, employment, and purchases of other goods and services, what you get is a major impact on the entire U.S. economy."

The National Economic Consulting practice of PricewaterhouseCoopers will carry out the study, which will include a nationwide census of more than 1,300 franchise companies. The study will measure direct impact: sales, payroll and jobs generated by franchised businesses, as well as indirect impact: the jobs and income generated when franchises buy from other businesses. The last component of the study will utilize IMPLAN economic modeling to develop the indirect impacts.

"There are currently no comprehensive statistical studies on the size, shape, and scope of the franchising sector in the United States," said John Reynolds, foundation president. Reynolds stated that the last statistical study of franchise systems was the three-year Profile of Franchising published by the foundation in 1998.

No federal agencies currently collect comprehensive data on franchised businesses, Reynolds said. "The U.S. Department of Commerce published a series of reports from 1980 to 1986 which relied upon a sampling of franchisors," he said. "The U.S. Department of Labor's Standard Industrial Classification (SIC) codes, which are used to track labor statistics and which provide the basis for the U.S. Business Census, do not include separate identifiers for franchised businesses."

"You will find franchises at nearly every corner intersection, every mall, in every office building, and every community in this country, and we figured it was time to count them and to document their importance to the U.S. economy," Rennick added.