Does Franchising Truly Have a 90% Success Rate?

When doing research on “franchise success rate,” you may come across some extremely high percentages of franchisees that have remained in business over several years.

Jason Daley recently wrote an article for Entrepreneur magazine talking about The Stat.  The Stat is the notion that franchises have a success rate of 90 to 95 percent, which makes it seem like a no-brainer that everyone should look at franchising.

The number just didn’t come out of nowhere.  It’s based on a Department of Commerce voluntary survey asking nearly 2,000 franchisors about their stats.  The results said that 5% of the units closed.  The biggest thing to consider with this survey – it was a voluntary survey that was not audited.  I wonder how many unsuccessful franchisors reported their numbers accurately, if it all?

The franchising industry became heavily regulated decades ago, after seeing many high-profile cases of misrepresentation and fraud.  The Stat just adds fuel to the fire.

Another thing to consider is that not all franchise categories are created equal.  Some types of businesses have better success rates as than others.

So, why am I telling you all of this?

If you are expecting a guarantee of success when considering a franchise, STOP the process now and focus on your day job. There simply are no guarantees. However, if you’re willing and able to take a calculated risk, there are things you can do to increase your likelihood of success, such as finding the right franchise for you, in the right geographic area, that fits your lifestyle and best leverages your transferable skills.  

FranNet has a matchmaking system that truly considers you and your goals when looking for a potential franchise match. In order to gather some hard data on how effective that process is, FranNet looked at 1,500 individuals it had helped get into franchised businesses between 2006 and 2010. According to the internal research, 91.2 percent of the businesses were still open after two years, and 85 percent were operating after five years. But FranNet’s President & COO, Jania Bailey, is quick to point out that those stats don't extend to franchising in general--she attributes the high success rate to the FranNet system. "Arguably, the time period we studied had the worst economic conditions since the Great Depression," she says. "That success rate speaks volumes about our ability to match a person and their skill set to the right franchise concept."

There are also many times where after taking all things into consideration, we suggest that franchise ownership may not be the right road for you.

All of our consultations, events, workshops and webinars are FREE to you, and we want to give you the most thorough information in making this decision. 

In Conclusion

Going back to the question posed in the title of this blog article, does franchising truly have a 90% success rate?  There really is not a conclusive answer to that, and with over 3000 concepts out there, it’s near impossible to quantify the success rate of the industry as a whole. The good news is that once you’ve narrowed the field to a handful of franchises that seem to fit your personal criteria, you’ll be able to look at the track record for at the last three years of those specific companies you’re investigating by reading the Franchise Disclosure Document prescribed by the U.S. Federal Trade Commission.

But, how can you increase your likelihood of success?  Do your homework and call FranNet!  Take advantage of our FREE consultations, events, webinars and workshops and give yourself the best chance of success.

Ready to get started?  Give me a call at 616-891-1374 or email me at bbetser@frannet.com.  You can also visit my web site at frannet.com/bbetser.

Read more at http://www.entrepreneur.com/article/227394#.