Franchise vs Independent Business: How Franchise Establishments Compare on Sales, Size and Pay in the Same Industries, 2007 to 2017

What counts as a franchise establishment in Census data

The 2017 Economic Census is the only US source that reports franchise and non-franchise establishments (single physical locations with paid employees) side by side, industry by industry, with sales, payroll and employment. Census released the 2017 franchise report on 2021-08-26 for nearly 300 industries in 15 NAICS sectors (Census tip sheet, 2021). The franchise question was first collected across industries in the 2007 Economic Census (Census, 2018).

• Franchise establishment: a location that reported operating under a trademark or brand authorized by a franchisor, the wording used in 2017 (Census CES-WP-19-20).
• Franchisee-owned: operated by someone other than the owner of the franchise system. Franchisor-owned: operated by the franchise system owner itself, often called a company-owned unit (Census America Counts, 2021).
• Non-franchise (the “independent” group in this study): all establishments in the industry minus franchise establishments. Census does not publish this group; we derive it by subtraction. It includes single-location independents and also company-owned locations of chains that do not franchise.
• Sales: sales, value of shipments or revenue. It is a census revenue statistic, not profit and not franchisee income.

Census research staff describe an establishment as not franchise-affiliated if the franchise section of its form was left blank or answered no (CES-WP-19-20), and small single-establishment firms outside the census sample are represented by administrative records and usually do not fill in a form (2017 Economic Census methodology). Some franchises can therefore sit in the non-franchise group.

Franchise vs independent business: how this study compares them

This study compares franchise vs independent business establishments inside the same 6-digit NAICS industry, so that a hotel is compared with a hotel and a tax preparer with a tax preparer. We use the Census bulk files for 2017 (EC1700FRAN), 2012 (EC1200CFRA1) and 2007 (EC0700CFRA1), US rows only.

Coverage. The 2017 file holds 286 industries. 268 have a published franchise establishment count; 15 have no franchise row and 3 franchise rows are flagged S (below publication standards). Cells flagged D (withheld to avoid disclosure) or S, and employment shown only as a size range, are treated as missing, never as zero (Census data dictionary). That leaves 266 industries where every franchise and non-franchise input is published. New car dealers are 100% franchise, so they have no non-franchise comparison.

Metrics. For each industry and group: sales per establishment, employees per establishment, annual payroll per employee and sales per employee, plus the ratio franchise / non-franchise and franchisee-owned / franchisor-owned. A ratio above 1 means the franchise (or franchisee-owned) group is larger.

Weighting. Counting industries treats a niche industry like limited-service restaurants. We therefore also compute a within-industry index: actual franchise sales divided by what the same franchise establishments would sell at the non-franchise average of their own industry, times 100. The same method gives employee and pay indexes.

Response coverage. Census reports, for each industry, the share of sales from establishments that answered the franchise question (Census glossary); 2017 shows it in 10-point bands. It is listed in table A1.

Trend. Industries are linked across 2007, 2012 and 2017 only where the Census NAICS concordances show a one-to-one match (2007 to 2012, 2012 to 2017). The 258 matched industries hold 482,311 of the 498,234 franchise establishments of 2017.

Finding 1: In the largest franchise industries, franchise units are usually bigger

In the industries where franchising is most common, franchise establishments were usually larger. Among the 25 industries with the most franchise establishments in 2017 (together 399,506 units), franchise units had higher average sales in 15 of 24 comparable industries and more employees per location in 17 of 24.

• Limited-service restaurants: $1.19 million vs $750,000 in sales per establishment (ratio 1.59); 22.2 vs 11.9 employees.
• Full-service restaurants: $1.45 million vs $1.15 million (ratio 1.26).
• Hotels and motels: $4.01 million vs $2.61 million (ratio 1.54).
• Offices of real estate agents and brokers: $1.54 million vs $795,000 (ratio 1.94).
• Convenience stores: $1.71 million vs $753,000 (ratio 2.27); child day care: $1.02 million vs $511,000 (ratio 1.99).

The pattern did not hold in 9 of 24 of the top comparisons. Franchise fitness centers averaged $617,000 against $1.00 million (ratio 0.61), exam preparation and tutoring $377,000 against $658,000 (ratio 0.57), services for the elderly $1.11 million against $1.62 million, and passenger car rental $1.94 million against $2.68 million. Gasoline stations with convenience stores (0.96) and janitorial services (0.99) were close to parity. All figures: US, 2017.

Weighted by franchise establishments, franchise units in the top industries sold 125.6 for every 100 sold by non-franchise units of the same industries, and employed 146.4 workers per 100. Sales per establishment is revenue; it says nothing about costs, royalties or what an owner keeps.

Finding 2: Across all 266 comparable industries, the size advantage is the exception

Across every industry Census covers, the size advantage is the exception. Franchise establishments had higher average sales than non-franchise establishments in 100 of 266 (37.6%) comparable US industries in 2017. The median industry ratio was 0.85. Employees per establishment split evenly: franchise units had more in 134 of 266 (50.4%), and sales per employee were higher for franchises in only 85 of 266.

The result depends on where you look. Franchise units out-sold non-franchise units in 9 of 11 accommodation and food service industries, 19 of 35 other services industries (repair, personal care), 14 of 39 administrative and support industries and 5 of 19 construction trades. Among industries with 1,000 or more franchise establishments the count was 27 of 57; among industries where franchises are 25% or more of establishments it was 10 of 17.

The pooled averages that circulate online mix industries. A franchise establishment averaged $3.47 million in 2017 and a non-franchise establishment $1.95 million. The frequently quoted comparison figure of $2.3 million (Census webinar, 2021; Census America Counts, 2021) is the average for all establishments in the covered industries ($2.27 million in our calculation), not for non-franchise ones. Because restaurants and hotels hold most franchise units, the weighted within-industry index (115.6) is the fairer single number.

Finding 3: Franchisee-owned vs franchisor-owned units differ by industry, in both directions

Most franchise establishments are franchisee-owned: 83.3% in 2017 across industries where both splits are published. Whether franchisee-owned units are larger than franchisor-owned units depends on the industry. Franchisee-owned units had higher average sales in 106 of 236 (44.9%) US industries (median ratio 0.96) and in 13 of 24 of the comparable top franchise industries.

• Franchisor-owned units were much larger in hotels ($11.21 million vs $3.14 million for franchisee-owned), exam preparation and tutoring ($976,000 vs $329,000) and fitness centers ($1.06 million vs $567,000).
• Franchisee-owned units were larger in child day care ($1.11 million vs $536,000), beauty salons ($320,000 vs $178,000) and real estate offices ($1.63 million vs $965,000).
• In the two largest restaurant industries the gap was small: limited-service $1.18 million vs $1.23 million, full-service $1.43 million vs $1.51 million (franchisee-owned first).

Electronics stores are an outlier: franchises were 47.6% of establishments but only 9.9% of those franchise units were franchisee-owned, and passenger car rental was similar (13.6% franchisee-owned). Census tables carry no brand detail, so we cannot say which systems drive these patterns. All figures: US, 2017.

Finding 4: Franchise payroll per employee is lower in most industries

Franchise establishments paid less per employee than non-franchise establishments in the same industry in 173 of 266 comparable US industries in 2017, and in 19 of 24 of the top franchise industries. Weighted by franchise employment, the within-industry pay index was 86.9 (non-franchise = 100).

• Limited-service restaurants: $13,731 vs $16,536 annual payroll per employee (franchise vs non-franchise).
• Full-service restaurants: $16,064 vs $19,148; snack and beverage bars: $13,635 vs $16,091.
• Tax preparation services: $7,457 vs $17,033; exam preparation and tutoring: $10,870 vs $22,431.
• Exceptions with higher or equal franchise pay: convenience stores ($19,418 vs $17,324), gasoline stations with convenience stores ($20,205 vs $19,744), janitorial services ($21,025 vs $20,520) and child day care ($20,730 vs $20,752).

Pooled, franchise payroll per employee was $23,848 against $36,074 for non-franchise establishments; restated in August 2026 dollars with CPI-U (BLS via FRED), that is $32,591 against $49,299. The restatement only changes the price level of 2017 data; it is not a 2026 pay observation. Payroll per employee divides annual payroll by March employment, so industries and units with more part-time or seasonal jobs show lower figures. It is not an hourly wage.

Finding 5: Franchise share of establishments, 2007 to 2017, on matched industries

On 258 industries that can be matched one-to-one across censuses, franchises were 10.8% of establishments in 2007, 10.2% in 2012 and 11.4% in 2017 (US). Between 2007 and 2017 the franchise share rose in 150 matched industries and fell in 107 (one unchanged); 86 rose and 51 fell by 1 point or more.

Measurement changed along the way. Census research staff report that franchise establishments fell 9.8% from 453,326 in 2007 to 409,104 in 2012 partly because less manual review of answers was possible in 2012. For 2017 Census changed the question wording to reduce under-reporting, and the same researchers tested an automated review that recoded enough answers to raise the unweighted franchise count by 22% to 42% (CES-WP-19-20). The 2012 dip and part of the 2017 rise are therefore not clean economic signals.

• Beauty salons: 8.0%, 8.3%, 27.2% (2007, 2012, 2017).
• Hotels and motels: 46.9%, 47.0%, 57.9%.
• Automotive oil change and lubrication shops: 43.1%, 36.5%, 55.5%.
• Gasoline stations with convenience stores: 34.9%, 33.7%, 18.0%.
• Limited-service restaurants: 59.1%, 54.3%, 57.3%; full-service restaurants: 13.7%, 12.5%, 12.5%.

Jumps of 10 or more points in a single industry may reflect reporting changes as much as business change. For growth estimates from other sources and why they differ, see our franchise industry growth review.

Finding 6: Annual Business Survey firm data for 2023 point the same way

The Annual Business Survey (ABS) asks firms, not locations, whether all or part of the business operated as a franchise. Census names each ABS by collection year: table AB2300CSCB01 is the 2024 ABS, which covers data year 2023 (Census ABS API page; ABS methodology 2024). In it, 4.7% (135,505 of 2,913,207) responding US employer firms answered yes, and those firms held 10.2% of employment at responding firms (AB2300CSCB01, data year 2023).

• Restaurants and other eating places: franchise firms were 19.6% (SE 0.7) of responding firms and 41.1% of employment, with 71.3 vs 24.9 employees per firm (franchise vs non-franchise).
• Automobile dealers: 31.6% (SE 2.9) of firms; gasoline stations: 16.7% (SE 1.0).
• Traveler accommodation: 41.5% (SE 1.7) of firms, but franchise firms averaged fewer employees (32.6 vs 54.2).

The firm data point the same way as the 2017 establishment data in most franchise industries: firms that franchise are a small share of firms (4.7% (135,505 of 2,913,207)) but a larger share of jobs. A franchisee with ten restaurants counts once as a firm, which lowers franchise firm shares and raises employees per firm compared with establishment counts, so the two sources are not directly comparable. State and metro franchise shares from the ABS are in our franchise statistics by state report.

What the census comparison can and cannot tell a business buyer

For someone comparing a franchise vs independent business, the census answers a narrow question well: in a given industry, how big is the typical franchise location compared with the typical other location? In restaurants, hotels, real estate brokerage, convenience stores and child care, franchise locations were larger in 2017. In fitness, tutoring, car rental and several retail industries they were smaller.

The census cannot answer whether a franchise earns more, costs more to run or survives longer. Sales per establishment ignores royalties, rent and debt. For unit economics, the FTC Franchise Rule’s Item 19 is where a franchisor may disclose financial performance (16 CFR 436.5(s)); many franchisors make no such disclosure. Startup cost data are in Item 7 and covered in our franchise costs guide. On survival, a Census working paper found new franchised businesses had a first-year survival edge of about 6.3 points that largely disappeared after the first year (CES-WP-17-21); more in our franchise failure rate study.

Industry choice matters more than the franchise label in these data. Our franchise ideas hub groups brands by industry, and our buying a franchise guide covers due diligence. This report is information, not financial, legal or tax advice.

Caveats and open questions

• Age of data. 2017 is the latest establishment-level franchise data; markets, prices and pay have changed since. No 2022 US table exists.
• Non-franchise is a residual. It mixes single-location independents with non-franchised chains, and may include franchises that left the question blank. Census notes that estimates derived by subtraction carry the same limitations as the source cells and should not be attributed to the Census Bureau (data dictionary). All non-franchise figures here are our calculations.
• Response coverage varies. In some industries (for example electronics stores, 10% to 20%) few sales came from establishments that answered the franchise item; results for those industries are weak.
• Withheld cells. D and S cells are excluded; franchisee and franchisor splits are withheld more often than totals, so ownership comparisons cover fewer industries.
• Counts differ by publication. The bulk file sums to 498,234 franchise establishments; a Census webinar cites 498,328 (Census, 2021). We use the file. Industry-group estimates such as the IFA outlook use different definitions and are not comparable.
• No causality. Larger franchise units do not show that franchising causes larger sales; location, format and selection all differ.

Data tables

Tables A1 to A6 are built from the Census bulk files by the scripts listed in the methodology. Each is downloadable as CSV. A full 286-industry file and a 258-industry trend file are also available below.