While many sectors of the economy have been struggling with flat sales or growth in fits and starts, no such problems have afflicted the franchise sector in recent years.

According to a new series of studies from the International Franchise Association (IFA) Educational Foundation and FRANdata, a unit of Franchise Information Services Inc., franchised businesses continue to grow at a rapid pace, and new franchise concepts are being rolled out in increasing numbers.

"More industries are choosing franchising as a method of expanding their business," said IFA president Matthew Shay, noting that the sector's impact on the U.S. economy alone was recently pegged at more than $1.5 trillion. Franchising accounts for almost 10% of the entire private-sector economy in the U.S. and provides jobs for some 18 million Americans.

Drawing on a database of nearly 2,500 franchise concepts, researchers found that the number of new concepts was on the rise in 17 of 18 industry categories studied. Between 2003 and 2005, those increases ranged from 67% in the retail food sector to 4% in personnel services. The only industry to sustain a decline was travel.

With nearly 500 franchise concepts in operation, fast food accounted for 20% of the total, including many new franchises that have sprung up to meet the growing demand for ethnic cuisine. The retail and service business industries each posted gains of 11% in new concepts.

Franchise entrepreneurs are creating new concepts with growing frequency. The study found that almost 900 concepts had started franchising over the three-year study period, with more than half--500--of the new franchise ventures debuting in 2005 alone.

In terms of size, among franchise systems with at least one operating franchised unit up and running, one third of all concepts had more than 100 units in their networks, and nearly half had more than 50 units. About a quarter of franchise systems reported having 10 or fewer franchised units in operation, a reflection of the rapid growth of new franchise concepts from 2003 through 2005.

Among the study's findings were some that dispelled commonly-held assumptions about franchising. For example, the franchising sector has witnessed a trend of multi-unit expansion in recent years, leading some observers to expect that the percentage of systems with larger unit counts would have increased in size. However, the study reported that no such increase took place. The number of new concepts in recent years has led to a higher concentration of systems with relatively small unit totals.

The distribution of franchised units across industry classifications occurred in a pattern similar to that found in concept distribution, the study determined. Fast food accounted for 19%, retail for 11% and service businesses for 11% of franchised units.

The strongest growth in the number of franchised units took place in three industry categories. Service businesses recorded growth of about 31% in franchised units, building and construction franchises came in with a 29% gain, and child-related franchise businesses saw their unit total climb by about 27%.

The researchers also looked at the initial investment requirements of franchise systems and found a wide range in the amount of capital it takes to get started in different types of franchise concepts.

The study cites two main reasons why understanding this topic presents some complicated challenges. First, franchising exists in a great many different types of businesses. Each industry and sub-sector may have a widely different set of initial expenses that make up the initial investment requirements based on its business model. Second, franchise systems within a given sector may offer varying types of units or programs. The vast majority--93%--of franchise systems have a standard program, i.e, a stand-alone or in-line store. However, franchisors also may offer non-standard programs, such as kiosks, satellites, express and/or mobile units.

A number of franchises offer more than one type of program. In broad terms, the types of programs used by franchise systems include:

As mentioned, standard programs are by far the most common, offered by 93% of all franchise systems studied. Seven percent offer a vehicle/mobile option; 6% offer a home office option; 4% offer express units; 4% offer carts or kiosks; 3% offer satellites; 1% offer institutional locations; and 8% offer some other type of program.

By far, the greatest number of non-standard programs are found in the fast food industry, followed by maintenance services, retail, service businesses and retail food. The lodging, education-related and personnel services sectors are least likely to offer non-standard program options.

Initial fees are part of the investment required by a franchisor in order for a franchisee to secure the rights to and open a new franchise within that system. In some cases, the initial fee covers only start-up training and/or processing expenses. In others, the initial fee may secure a territory or unit location. As a result, initial fee values can vary dramatically.

About 75% of franchise systems have a uniform initial fee, but there is a wide range of initial fees in a handful of industries, according to the study. Three factors are behind that situation:

Following are minimum, maximum and median initial fees for standard and non-standard programs in some of the franchise sectors included in the study: