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Franchising 2013: An In-Depth Look at Franchisee Satisfaction and Performance

New survey’s findings show franchisee ownership growing post-recession, satisfaction among franchise operators very high.

Satisfied? Driven by the desire to be financially independent? Cautiously optimistic? Those are the primary traits of the “typical” franchisee according to the latest research by Franchise Business Review, based on recent independent surveys of more than 26,000 current franchise owners (franchisees) representing small, medium and large companies across 360 different franchise brands and in 15 major industry categories.

Franchise Business Review’s findings show that not only is franchisee ownership growing post-recession, but satisfaction among actual franchise operators is very high. The vast majority of franchisees (90 percent) indicate that they enjoy operating their business, and 87 percent enjoy being part of their franchise organization. Overall, eight in 10 respondents say they would recommend their brand to other prospective franchisees looking to invest.

Franchisees also give their franchisors high marks in the areas of leadership and core values. Eighty percent indicate that they respect their franchisor, and most franchisees (79 percent) believe that their franchisor operates the brand with a high level of honesty and integrity. Seventy-six percent say their franchisor cares about their success and that they trust their franchisor.

While satisfaction is high, however, the survey found that franchisors are generally more optimistic about franchisee business outlook than franchisees. Franchisee optimism, while positive overall, lags that of franchisor optimism on average by 20 to 30 percentage points. That said, the vast majority of franchisees (84 percent) feel more positive or equally positive about their franchise business as compared to a year ago.

Money is not the only factor driving people to buy a franchise, but for most franchisees (51 percent), the goal of “financial independence” is the No. 1 reason they choose to go into franchising. A quarter of franchisees lists “more control/more flexibility over their career” as the No. 1 driving force for buying a franchise, while 20 percent indicate “other factors” as the primary reason for jumping into franchise ownership. A small minority (2 percent) say they are second-generation franchisees, taking over the family business. As the current franchisee population continues to age and more owners approach retirement, we expect to see a spike in second-generation (and even some third-generation) franchisees taking over control of the business.

Key Strengths and Opportunities Among Franchise Companies

Of the eight primary areas Franchise Business Review researches − which include training and support, franchise system, leadership, core values, franchisee community, franchisee performance, financial opportunity and general satisfaction − the top five areas of strength across all franchise companies overall include:

  • Franchisees are supportive of the brand (77 percent).
  • Franchisees would “Do it over again, knowing what they know today” (74 percent).
  • Quality of products/services (74 percent).
  • Clear vision promoted by senior management (73 percent).
  • Senior management encourages a strong team culture (73 percent).

From the same eight primary research areas listed above, the top five areas where franchisees rate their brands the lowest—average or poor (and therefore the greatest opportunities for franchisors to make improvements in their systems) include:

  • Advertising, marketing and promotional programs (23 percent).
  • Effective use of technology (21 percent).
  • System-wide communications (21 percent).
  • Involvement of franchisees in important decisions (21 percent).
  • Innovation and creativity of the brand (19 percent).

A Survey Snapshot

Franchise Ownership Tenure
(How long have you owned your franchise business?)

  • Less than two years, 30 percent
  • 2 – 5 years, 32 percent
  • 6 – 9 years, 18 percent
  • 10+ years, 20 percent

Units/Locations/Territories Owned

  • Single unit/territory, 67 percent
  • 2 – 4 units/territories, 26 percent
  • 5+ units/territories, 7 percent

General Franchisee Demographics

  • Median age 45-54, while less than 12 percent are 34 or younger, and 28 percent are over 55
  • 82 percent are Caucasian
  • Two-thirds (67 percent) are male, only 22 percent are female-owned businesses, while an additional 11 percent report being equal male/female partners in the business
  • 44 percent have a bachelor’s degree, while 19 percent hold an advanced degree
  • 12 percent are U.S. military veterans

Research Methodology

Franchise Business Review’s research is based on independent satisfaction surveys of 26,158 franchisees conducted between January 2012 and June 2013. The franchisees surveyed represent a broad, sample size of different franchise brands and industries. The 360 companies researched range in size from as small as 12 franchisees, to systems with more than 3,000 franchisees. The industry breakdown on a percentage basis is: Automotive (10 percent), Business Services (9 percent), Child Service (4 percent), Cleaning & Maintenance (5 percent), Food (16 percent), Health & Beauty (2 percent), Hotels (1 percent), Services (18 percent), Pet Services (2 percent), Real Estate (9 percent), Retail (4 percent), Senior Services (6 percent), Sport/Fitness/Rec (5 percent), Education (2 percent) and Travel Services (6 percent).

Only currently active franchisees were contacted for this study (former franchisees were not contacted). The average franchise company had 273 units/territories, with 144 active franchisees. Franchise Business Review attempted to contact all active franchisees, by phone and/or by email, up to five times. A participation rate of 50 percent was achieved. Surveying was completed both online and over the phone, where franchisees were asked 33 benchmark satisfaction questions, and an additional 20 market and demographic questions.

Eric Stites, CFE, is CEO and managing director of Franchise Business Review, a national franchise market research firm. Stites serves on the IFA’s Franchise Relations Committee. Find him at fransocial.franchise.org via the directory.

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