Franchises provide big boost to nation's economy: study measures jobs, payroll, overall output.

Franchised businesses generate jobs for more than 18 million Americans and account for 9.5 percent of the private-sector economic output, a study released March 2004 by the International Franchise Association Educational Foundation reported.

Conducted by PricewaterhouseCoopers, "The Economic Impact of Franchised Businesses" found that more than 760,000 establishments in franchise systems generate a total economic output of more than $1.53 trillion, or nearly 10 percent of the

Franchises, which include such businesses as quick-service restaurants and real-estate agencies, auto repair shops and hotels, directly employ 9,797,000 people, about the same number as the U.S. durable-goods manufacturing sector. Franchising employment is almost as large as that of the information and construction sectors combined. Combining both direct and indirect job activity, franchising generates one out of every seven jobs in the private sector.

"While the number of businesses that use franchising as a method of distributing their products and services has steadily increased since the 1950s, there has been very little broad-scale economic research about this phenomenon," said Dick Rennick, foundation chairman and CEO of American Leak Detection, Inc.

The study measured the direct and indirect impact of franchised businesses, focusing on the number of jobs, payroll and output they generate. Total economic impact is the effect of what occurs both in and because of franchised businesses. The businesses provided $506 billion or more than 11 percent of the U.S. private-sector payroll.

The study describes the impact on the U.S. economy for two types of franchises: business-format and product-distribution. Business-format franchises operate in more than 75 industries such as restaurants, hotels, auto services, convenience stores and tax-preparation services. Examples of product-distribution franchises are gas stations, auto and truck dealers, and beverage bottlers and distributors.

Business-format franchises accounted for 622,272 establishments, 7,787,454 jobs and $162.9 billion payroll resulting in $460 billion of economic output. Business-format franchising employed about as many people in 2001 as the financial services industry. Product distribution franchising operated in 145,211 establishments providing 2,009,663 jobs and $66.2 billion in payroll producing $164.6 billion of economic output.