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The franchise market size is forecast to reach at USD 4454.03 billion, at a CAGR of 9.58% from 2022 and 2027. The growth of the market depends on several factors, such as a rise in the number of restaurants and hotels worldwide, the growing demand for convenient food products, and the increasing construction activities. Our report examines historic data from 2017 to 2021, besides analyzing the current market scenario.
This report extensively covers market segmentation by type (business format franchise, product distribution franchise, management franchise, and others), application (hotels, convenience stores, real estate, car rental and dealers, and others), and geography (North America, Europe, APAC, South America, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges.
Franchise Market Forecast 2023-2027
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Our researchers studied the data for years, with 2022 as the base year and 2023 as the estimated year, and presented the key drivers, trends, and challenges for the market. Although there has been a disruption in the growth of the market during the COVID-19 pandemic, a holistic analysis of drivers, trends, and challenges will help companies refine marketing strategies to gain a competitive advantage.
The construction of commercial spaces such as offices, storehouses, and shopping malls is increasing across the globe. The construction industry is expected to experience strong growth due to rapid industrialization and urbanization in emerging economies such as China, Thailand, Malaysia, and Indonesia. The Middle East raised spending on the construction of commercial spaces, institutional buildings, manufacturing plants, and public buildings.
In addition, countries such as the US, UK, Germany, Australia, Brazil, Spain, Italy, Canada, and Japan are also investing heavily in non-residential spaces. As a result, the construction industry is expected to witness significant growth, which in turn will boost the demand for real estate franchises and fuel the growth of the global franchise market during the forecast period.
The digitization of in-store retail supports service personalization for customers. Most supermarket chains and hypermarkets have to compete with online subscription models offered by e-commerce companies like Amazon, which allow customers to hoard on multiple purchases. However, the same concept can also be applied in in-store retail, encouraging customers to shop in person to supplement their daily needs with some premium purchases.
Furthermore, franchisees are getting more innovative in how they communicate with in-store shoppers. With an innovative in-store concept involving the use of mobile apps, customers can easily search for the items they want to buy in-store. In addition, touch screens integrated with the fitting room help customers to try on clothes and shoes online, while self-service checkout kiosks help to avoid long queues. Thus, such innovations in the franchisee's in-store retail operations will drive the growth of the market over the forecast period.
Franchise businesses may have difficulty maintaining brand consistency due to their presence in multiple regional, national, and global locations. Franchise brands risk losing control of customer opinions and not being aware of the wealth of information that can be gained from managing online consumer feedback, e.g. assessment forms. Many industries are experiencing skills shortages, and employee turnover and retention is an ongoing problem for all businesses, including franchises.
Moreover, increased employee turnover exacerbates other problems within the business, such as raised operating costs and reduced customer satisfaction, as experienced employees no longer have to be replaced by less qualified employees. It can also reduce the quality and service of the franchise. Therefore, the high pressure to maintain brand consistency and quality will impede the growth of the market during the forecast period.
The business format franchise segment will account for a major share of the market's growth during the forecast period.?In business franchising, the franchisor provides the franchisee with a complete operating system in addition to the trade name, product, and service. The franchisor gives guarantees a paid training program before starting a business and provides support for opening a business (franchise) within the framework of the business model.
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The business format franchise segment was valued at USD 793.32 billion in 2017 and continued to grow until 2021. Shareholders' earnings are often used for nationwide promotional efforts to support individual franchises and brands. It is important to note that business model franchisees are often prohibited from selling unapproved products and are often required to sell some (or all) of the franchisor's goods or services. Thus, these advantages of business franchising will boost the growth of the segment during the forecast period.
Application Segment Analysis:
Based on application, the market has been segmented into hotels, convenience stores, real estate, car rental and dealers, and others. The hotels?segment will account for the largest share of this segment.?The hotel franchisor grants the local owner the right to use the name (brand) and products of the parent company. The hotel franchise with the most favorable and populated location is the most successful. So, before opening a business, franchisors and business owners must invest time and resources in choosing the right location. Then they should focus on getting the license. In addition, rising demand for hotels due to various factors such as travel and tourism as well as growing disposable income will push the growth of the segment and market during the forecast period.
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North America is estimated to contribute 38% to the growth by 2027. Technavio’s analysts have elaborately explained the regional trends, drivers, and challenges that are expected to shape the market during the forecast period. The growth of the franchise market in North America can be attributed to factors such as the increasing number of restaurants, rising preference for dining, brand loyalty, interest in new dining experiences, and the opening of new retail and convenience stores. The US and Canada are the main contributors to the market growth in the region.
Moreover, quality infrastructure, high purchasing power, and people's lifestyles are some of the key factors that make this region highly advantageous for the auto industry, thereby boosting the demand for car rental. dealerships and franchises. Furthermore, rising public debt is expected to increase the inflation rate, which will reduce the ability of middle-class individuals to own cars. This will lead to an increase in car rental demand in the region. Hence, these factors will boost the growth of the market during the forecast period.
In 2020, the regional franchise market was negatively affected due to the outbreak of COVID-19. However, in 2021, the initiation of large-scale vaccination drives?lifted the lockdown and travel restrictions, which led to the resumption of supply chain activities. Furthermore, the region has been undergoing notable growth in the number of retail stores. Hence, these factors are anticipated to drive the growth of the regional market during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market companies, including:
Ace Hardware Corp., Century 21 Real Estate LLC, Chick fil A Inc., Circle K, Jersey Mikes Franchise Systems Inc., JUBILANT FOODWORKS LTD., Kumon Institute of Education Co. Ltd., Marriott International Inc., Mathnasium LLC, McDonald Corp., Papa Johns International Inc., RE MAX Holdings Inc., Restaurant Brands International Inc., Seven and i Holdings Co. Ltd., SPC Group, The Wendys Co., United Parcel Service Inc., Winmark Corp., and YUM Brands Inc.
Technavio report provides an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The franchise market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Franchise Market Scope |
|
Report Coverage |
Details |
Page number |
177 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 9.58% |
Market growth 2023-2027 |
USD 1,634.71 billion |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
8.92 |
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
Performing market contribution |
North America at 38% |
Key countries |
US, Canada, China, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Ace Hardware Corp., Century 21 Real Estate LLC, Chick fil A Inc., Circle K, Jersey Mikes Franchise Systems Inc., JUBILANT FOODWORKS LTD., Kumon Institute of Education Co. Ltd., Marriott International Inc., Mathnasium LLC, McDonald Corp., Papa Johns International Inc., RE MAX Holdings Inc., Restaurant Brands International Inc., Seven and i Holdings Co. Ltd., SPC Group, The Wendys Co., United Parcel Service Inc., Wild Birds Unlimited Inc., Winmark Corp., and YUM Brands Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Application
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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