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Report finds metro Phoenix franchise rate lower than national rate

More than 4% Phoenix area businesses operate as franchises, according to a new report by Lending Tree, an online lending service.

Lending Tree examined census data for 50 metro areas that each had at least 529 franchises. It said 4.9% of U.S. businesses with employees are franchises. In metro Phoenix, it’s 4.2%.

El Paso, Texas has the highest rate at 11.2%, followed by San Antonio, Texas, at 9.5% and Charleston, South Carolina at 8.8%. The areas with the lowest rates of franchises are: San Diego and New York at 3.2% each, followed by Miami and Los Angeles at 3.3% each.

Hotels and food services make up the biggest chunk of franchises at almost 20% with educational services next at 12.4%. 

In a franchise agreement, a company allows a franchisee to sell their products or services for a fee and royalties. In exchange, the company provides support, which can include things like site selection and marketing.

Lending Tree found nearly 10% of Asian-owned businesses are franchises, the most of any race examined. The report did not include ethnicity only, which is why there is no breakdown for Hispanic-owned.

Franchise ownership by race

RacePercent of businesses that are franchise owned
Native Hawaiian and other Pacific Islander5.60%
Black or African American5.50%
American Indian and Alaska Native3.10%

Source: LendingTree analysis of U.S. Census Bureau data

As a senior field correspondent, Christina Estes focuses on stories that impact our economy, your wallet and public policy.