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What Percentage of Franchises Are Successful?

April 22, 2022
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There are many reasons why starting a franchise is one of the most pursued ways of becoming a business owner. They have brand recognition and a built-in customer base. These are some of the things we talk about frequently. We can't stress enough the importance of these two components when it comes to getting a head start on being successful.

Other benefits of buying a franchise include a network of support and provided training. Some franchises offer more of this than others, but every franchisor will offer these elements to franchisees on some level. What percentage of franchise businesses are successful with all of these benefits in place?

People Putting Hands Together as a Team Because Buying a Franchise Includes Support and Training

Read Between The Stats

The chances of franchises being successful over starting a new business look promising.

According to the U.S. Bureau of Labor Statistics in its entrepreneurship report, "It's generally accepted, because of their established, proven business practices, that franchises have higher success rates than independent businesses."

This doesn't mean that buying a franchise is guaranteed financial prosperity. Still, it suggests that franchise ownership is one way to up your chances of owning a successful business. Compared to independent companies, the same report states that "About 20 percent of all businesses in the U.S. close after the first two years of operation and a little over 38 percent after four years."

What sets franchises apart from startups is that the franchisor already went through the trials and errors of getting their business off the ground.

They learned what works for their company and what doesn't. And the franchise founder was able to prove their business model by expanding and sometimes even owning that second or third location to demonstrate that their business is scalable enough to be offered to someone else.

A five-year study by the franchise consulting firm FranNet reported that 92 percent of their franchise placements were still in business after two years and 85 percent after five years.

Because yes, sometimes franchise businesses can rise and fall like independently owned companies.

But choosing a franchise that fits in terms of having the right market conditions for growth illustrates why having a franchise consultant can help you find the right opportunity.

Another way to evaluate if a franchise will be successful is by studying the Small Business Administration's SBA loan default rates page.

This can give you a good idea about the types of franchises that succeed or fail. The SBA website can be a valuable tool. However, always conduct detailed research and survey current franchise owners to find a franchise that works for you.

Person Drawing Upward Line on Chart as Franchises Have Higher Success Rates Than Independent Businesses

Success You Can Bet On

No business is foolproof. That much we know.

When you weigh the pros and cons of starting a new business versus buying a franchise, experts will suggest better odds of success by owning a franchise. While you can't predict the survival rate for any business, including a franchise, you can increase your chances by understanding the types of franchises with the highest profitability percentage.

Also, keep in mind that franchising often comes with startup costs and royalty fees. Some franchise owners barely break even sometimes, just like what a startup would experience in its infancy as a company.

For instance, you can't say that 60% of franchises will succeed. But you can consider that certain industries are showing a higher percentage of success than others.

The good news is that the SBA is more likely to give you a franchise loan because of the benefits that are included when choosing to own a franchise over starting a new business from scratch. And there's no better place to find a business opportunity that has it all figured out for you than right here, at no charge, on All USA Franchises.

Your Franchise Search Ends Here

At All USA Franchises, we specialize in connecting entrepreneurs, investors, franchisors, and those looking to buy a franchise. We are the largest FREE database of franchise opportunities you'll find anywhere. We're on a mission to list all of the franchises in the U.S. Any franchisor can list their franchise opportunities here for free.

If you're looking for the perfect franchise to buy, you can start your franchise search here and find the right one by industry or by investment. This allows you to narrow your search down to those franchises that suit your specific needs.

Block Engraved With an Illustration of a Business Between Similar Blocks Symbolizing Multiple Successful Franchise Ownerships
It would be great to find a franchise with a guaranteed 100% success rate, but since that isn't going to happen, there are numerous steps you can take to help ensure your success.

Research, as we mentioned previously, is essential. We have many resources available for anyone looking for a franchise to buy.

We have an informative AUF blog that's full of helpful articles and tips for franchisees. You'll also find the latest franchise news here and we keep track of popular franchise events you won't want to miss. In addition to the blog and events information, we bring you a valuable resource section that helps you locate: franchise advisors, franchise brokers, franchise consultants, franchise financing, 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.

On a final note, we'll leave you with this...

COVID-19 has impacted businesses in different ways. Many new companies or mom-and-pop locations have had to close their doors permanently. This is also true for some franchises. But some have managed to survive due to their size and type of business model.

Surprisingly, Statista's report on estimated number of U.S. franchise establishments since 2007 to 2021, shows that the number of franchises in 2020 will slightly increase post-COVID.

This is because many people who have lost their jobs have either taken the plunge to secure their futures or have used the opportunity to create a new career path. The pandemic has also opened up new avenues for businesses, including a boom in online franchise opportunities and "no-contact" business models.

There's no denying that a franchise, with all of its many benefits, can be a huge success. If you're looking for a franchise, let All USA Franchises be your starting point of contact. We're here to help you find the right franchise, so you can be your own boss!

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