Statistics about the safety of investing in a franchise or non-franchise business has been discussed for years now. It’s worth pointing out that success rates usually start off at around 55% for retail franchised, and up to 95% across the industry. There are various sources and by viewing these sources, you can see how the statistics vary.
If you want to start a business, it would make sense to take a look at a business model that has a success rate of 95%. However, a reputable source has never published a statistic like that. This is something you should definitely be aware of.
One franchise industry veteran, Sean Kelley, said that survival statistics have been cited for such a longtime now, and it has been cited with assurance. He said many people who quote the stats probably believe it. This is because it has been mentioned so often throughout the last 20 years, so it’s not hard to believe that so many would easily believe those numbers.
There was a game called telephone and Sean’s reference kind of reminds us of that game. This game is when someone would whisper a secret into another person’s ear and then the secret would be passed on until the last person heard the secret. However, most of the time when the last person repeated the secret, it ended up being something completely different, and this is why franchise statistics reminds us of that game.
More and more information about business has been made public domain. This is thanks to the internet, and this also means more myths are being debunked and will continue to be debunked, and at one point, the International Franchise Association mentioned the success rate of franchises. In fact, the IFA’s president, Matthew Shay, wrote a letter.
In the letter, it said that some companies that are part of the IFA were publishing information that was not in date and that the picture of the sector was not that accurate. The letter also mentioned the success rate of franchised businesses, and said that this was concerning. The letter pointed out that a longtime a go there were studies done about franchising and such statistics were published, but studies stopped being done on it in 1987, which means the information really isn’t that valid.
Many professionals conduct seminars in regards to owning a franchise, and they tell their audience that the only statistic in regards to success is the audience’s own experiences with the ownership of franchises. What does this mean? It means there is some risk involved, and people actually have to start their own franchise.
However, there may not be as much risk involved with opening a franchise as there is with starting a business from the ground up, but the buyer of the franchise should open a franchise that matches their risk tolerance and personality traits. Nobody should buy a franchise just because it is popular because this is a good way to fail very quickly, and people should always do a lot of research. Even though there are not many statistics of franchise success rates out there, franchising is still a great opportunity that can help people achieve their financial dreams, and if you want to run a business and achieve financial success, then opening a franchise business may be for you, but do as much research as you can before you commit to anything.