CREAT: Census Research Exploration and Analysis Tool

Brighter Prospects? Assessing the Franchise Advantage using Census Data

January 2017

Working Paper Number:

CES-17-21

Abstract

This paper uses Census micro data to examine how starting a business as a franchise rather than an independent business affects its survival and growth prospects. We first consider the factors that influence the business owner's decision about being franchised, and then use different empirical approaches to correct for selection bias in our performance analyses. We find that franchised businesses on average benefit from higher survival rates and faster initial growth relative to independent businesses. However, the effects are not large and, conditional on first-year survival, the differences basically disappear. We briefly discuss potential mechanisms to explain these results. U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. Support for this research at the Michigan Census Research Data Center is gratefully acknowledged.

Document Tags and Keywords

Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

By analyzing the content of working papers, KeyBERT identifies terms and phrases that capture the essence of the text, highlighting the most significant topics and trends. This approach not only enhances searchability but provides connections that go beyond potentially domain-specific author-defined keywords.
:
profitability, econometric, macroeconomic, enterprise, sale, growth, venture, proprietorship, entrepreneur, revenue, business survival, franchising, franchise, franchisor, franchised businesses, franchise establishments, retail

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:
Internal Revenue Service, Longitudinal Business Database, Chicago Census Research Data Center, Economic Census, North American Industry Classification System, Survey of Business Owners

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