Greg Flynn, a Stanford Business School graduate, is reportedly worth over $1 billion, making him the first franchisee in the world to reach that milestone. Flynn's success story is a testament to the power of franchising, which has created countless millionaires in the US.
With over 850,000 franchise establishments in the country, employing around 9 million people, franchising is a significant contributor to the US economy. The model has been spreading into new areas, such as boutique fitness, home services, and child care, thanks to private-equity investors.
Franchising has long appealed to immigrants, with around two-thirds of American motels owned by Indians. The proposition has also become more attractive to young Americans, who are increasingly interested in in-person businesses and the trades.
Economists have long been fascinated by the franchise model, which blurs the boundary between a firm and the open market. Franchisors gain a network of motivated entrepreneurs, while franchisees are given the opportunity to run their own business with the security of an established brand.
However, franchising has also faced criticism, particularly regarding its impact on low-paid workers. Research has shown that eliminating no-poach clauses has raised affected workers' wages by 4-6%. While evidence of broader harm to workers is hard to find, the issue remains a topic of debate.
