Over 50% of retail sales in the U.S. are generated from franchises. Many franchises are successful for a number of reasons, including the ability of the franchise to grow rapidly. Franchisees provide the employees and other capital investments so the franchisor can invest elsewhere. Historically, companies that do not franchise grow more slowly than franchises. Additionally, the franchisor is able to choose proficient managers for potential franchisees; they do not have to provide the franchising rights to people they consider unqualified.
Franchisees can also benefit from a franchise. A franchisee is more likely to be successful than a business started from the ground up because the franchise has already been proven to be prosperous (and profitable). Additionally, franchisees will usually have an easier time borrowing money because lenders know that the franchisee is backed by the franchisor. Franchisees can benefit from a positive image created by the franchisor (franchisors often advertise on a national level, and can help franchisees create local advertising campaigns). For instance, Chipotle has a strong national image as a healthy and environmentally responsible alternative in fast-casual dining. Chipotle franchisees are largely successful because consumers know that a healthier, yet delicious meal is available at any franchise location. Lastly, franchisees are able to rely upon the efficient method of operation established by the franchisor, which has had experience in the market.