| "In Business for Yourself but Not By Yourself"
According to U.S. Department of Commerce, although only 8% of businesses are franchises, they represent 40% of all retail sales in the U.S. Franchising methods are proven and often better than trial and error, and a franchise has a higher value than an independent business and is easier to sell. Another reason franchises are successful is that the synergy of a group of people, all contributing ideas and motivation, is a benefit to each individual.
More than 60% of all franchisers have been in business at least a dozen years. Industry statistics show that the franchise failure rate is 2.1% in the first year, compared to approximately 80% of all new independent businesses.
A franchise is usually based on a proven business idea, which means that not only has the franchisor shown the product or service to be viable but all the systems required to run the business are already in place. And as most franchises are recognized brand names you will generally find it easier to sell to customers and, in turn, expand your business.
As well as specialized training, franchisees also benefit from any new products or services introduced by the franchisor. A franchisee, while self-employed, remains under the umbrella of the franchisor throughout the term of the contract. This is advantageous for the franchisee in terms of marketing and advertising and has led to the widespread use of the industry's adopted slogan: 'In business for yourself but not by yourself.'
Among U.S. franchises, 65% consist of fewer than 100 stores and 49% have under 50 locations.
Franchisees, which operate their businesses according to the original parent company's established system and format, reportedly have a higher rate of success than owners who start from scratch. |
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Business Failures Statistics (U.S. Dept of Commerce)
Over 1,000,000 new businesses are started each year in the United States
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Within the first 12 months of a new business start-up over 40% will fail
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Of those businesses that survive the first 12 months, another 80% will fail during years two (2) through five (5)
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Of those businesses that survive the first five (5) years, another 80% will fail during the second five years.
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The Benefits of a Franchise are:
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Use of established business names, marks and proven business systems
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Reduced set-up expenses
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Lower risk of failure
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Promotional and administrative power and support
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Ongoing training and advice
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Access to technology
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Superior market power
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Brand recognition
In short, franchising brings together all the skills and resources of an experienced company and combines them with the driving and dedication of an individual investor. |
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