According to a study done by the University of Louisville, franchising often helped to lead America out of its economic downturn.
Franchising is a unique business model that has encouraged franchise opportunities and the growth of franchised chain formula units because the franchisors collect royalties on the gross sales of these units and not on the profits.
Conversely, when good jobs are lost in the economy, franchising picks up because potential franchisees are looking to buy jobs and to earn profits from the purchase of franchise rights.
Franchising is a business model used in more than 70 industries and that generates more than $1 trillion in U.S. sales annually.
In the United Kingdom, there are no franchise specific laws; franchise UK are subject to the same laws that govern other businesses. For example, franchise agreements are produced under regular contract law and do not have to conform to any further legislation or guidelines.
There is some self-regulation through the British Franchise Association (BFA). There are several people and organizations in the industry calling for the creation of a framework to help reduce the number of “cowboy” franchises and help the industry clean up its image.
On 22 May 2007, hearings were held in the UK Parliament concerning citizen initiated petitions for special regulation of franchising by the government of the UK due to losses of citizens who had invested in franchises. The Minister of Industry indicated that if due diligence were performed by the investors and the banks, the current laws governing business pacts in the UK offered sufficient protection for the public and the banks.