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Franchise Success Rate

June 25, 2020
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None of us go into business for ourselves intending to fail. The reality of the business world is that some succeed and some fail. There are a lot of factors that determine the success or failure of a business, and even with the best and most diligent business planning, it could fail. Some of the factors that might play into your business's failure include a poor choice of location, a product or service that wasn't as in demand as you thought, not enough operating capital, lack of knowledge, insufficient or poor marketing, or a bad economy. We've mentioned before that one way to get into business for yourself with less risk is by purchasing a franchise. Several advantages increase the franchise success rate and make it a "safer" option than starting a brand new business.

Business Man Selecting Successful Upward Franchise Arrow

The Small Business Administration (SBA) issues loan guarantees for those who want to purchase a franchise. Some financial advisors suggest the SBA might be more likely to issue a loan for a franchise than a new business because a franchise has an established track record, a recognized brand, and a built-in customer base. Some lenders won't lend to new businesses, and they would rather lend money for a franchise because the rate of success is higher. The SBA even issues loans to already-established franchises should the need arise.

Why is The Franchise Success Rate So Good?

Not one source agrees on the exact success rate for franchises. It tends to vary, ranging from 80 to 90%. As we mentioned earlier, there are a lot of circumstances that can affect the success or failure of any business, including a franchise business. What a franchise has going for it over a new business is a recognized product or service, a brand that consumers already know and trust, and a built-in customer base. All of these factors contribute to the overall success rate of many franchise businesses. There's more. Franchises come with training materials that contribute to their success rate, and franchisees have access to processes and products that have already been tested and perfected in the market. Franchisees also have the benefit of corporate marketing efforts that help them succeed in business. These are all factors that make buying a franchise a good choice when you want to be in business for yourself without the risk of starting a new business.

Dart Successfully Landing on a Pile of Gold Coins Representing Franchise Revenue

A word of caution is in order. It would be best if you never bought a franchise under the impression that it won't require hard work. Buying a franchise can be seen as a shortcut to owning your own business, but that doesn't mean you won't need to work to be successful. If you are an owner/operator, chances are, you're going to spend time at your franchise to make sure it's being run according to franchise standards. You'll be in charge of hiring the staff who will be in charge of your franchise's day-to-day operations. Hiring the right team for each job is a significant factor in the success of your franchise. Ensuring the franchisors' standards are being met will all be the determining factor in the success of your franchise. As the owner, all of these things will fall on you. Making the right decisions for your franchise can contribute to your success rate.

Franchise Owner Hiring the Right Staff for the Franchise

Franchise or New Business: Which is the Right Choice?

So, if a franchise has so many built-in benefits, why would anyone want to start a new business? Well, for many people, a franchise is hands-down the right idea, but not for everybody. If you believe in your product or service, if you've done the legwork necessary for starting a brand-new business, and if you're ready to take the losses with the gains, then you may want to start your own business. According to the SBA, it can take two or three years for a start-up to begin to succeed. If you're willing to wait and have set aside the funds to sustain your business during this time, a new business might be the way for you to go. The major benefit of a start-up is that you are in control of branding, how the business operates, and how it is marketed. It also means you lose many of the benefits we mentioned earlier regarding franchising.

Potential Business Owners Wondering If to Choose a Franchise or a New Business

In the end, the choice is yours. However, if you don't have a product or service you can market, then a franchise is an option for getting into business for yourself. And even if you do have a product or service but don't want to take the risk associated with a new start-up, buying a franchise might still be your best option. There are plenty of franchise advisors and business advisors who can help you weigh your options.

All USA Franchises is a Great Place to Find a Franchise

If you are looking for a franchise opportunity, All USA Franchises is the largest FREE franchise directory you can find. We are on a mission to list all of the 3000 plus franchise opportunities in the US, so whether you're an investor, someone looking to buy a franchise, or a company wanting to list their franchise for sale, you can benefit from All USA Franchises. You can search franchises by industry or investment, which lets you narrow down your options, and we even provide you with an informative blog full of helpful articles and tips for franchisees as well as the latest franchise news. We also bring you the latest information about the franchise events you won't want to miss. In addition to the blog and events information, we offer a valuable resource section that helps you locate franchise advisors, franchise brokers, franchise consultants, franchise developers, franchise lawyers, and franchise training services. These resources will save you time and can provide you with additional franchise help when you need it. When you ready to pursue your dream of owning a franchise or finding a good franchise investment, let us be a part of your search.

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