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.
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:
profitability,
econometric,
macroeconomic,
enterprise,
sale,
growth,
venture,
proprietorship,
entrepreneur,
revenue,
business survival,
franchising,
franchise,
franchisor,
franchised businesses,
franchise establishments,
retail
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identified to contain references to specific institutions, datasets, and other organizations.
:
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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