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What Percentage of Franchises Are Successful?

April 28, 2021
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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. That's because we can't stress enough the importance of these two components when it comes to getting a head start on success.

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

Businessmen and Women Putting Hands Together as a Team

Read Between The Stats

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 success, but it suggests that franchise ownership is one way to ensure your chances of owning a successful business. 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."

According to a five-year study performed by the franchise consulting firm FranNet, they reported that 92 percent of their franchise placements were still in business after two years and 85 percent after five years. This illustrates how important a franchise consultant can be when researching and choosing the right franchise opportunity.

Another way you can evaluate if a franchise will be successful is by studying the Small Business Administration's SBA loan default rates, which can give you a good idea about the types of franchises that succeed and fail. This can be a valuable tool, used in conjunction with more detailed research, to help you find a franchise with the best chances for success.

Businessmen Touching Invisible Screen Showing Rising Success Rate

Success You Can Bet On

No business is foolproof. That much we know. Any business can succeed or fail, but when you start to weigh starting a new business versus buying a franchise, most experts will suggest better odds of success by owning a franchise. While you can't predict the success or failure rate for any business, including a franchise, you can increase the success rate by understanding the types of franchises that see the highest percentage of success.

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 mentioned above of choosing a franchise over starting a new business from scratch.

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, on a mission to list all of the franchises in the U.S. With us, franchisors can list their franchise opportunities. If you're looking for the perfect franchise to buy, you can start your franchise search and find the right franchise by searching for one by industry or by investment. This allows you to narrow your search down to those franchises that suit your specific needs.

Franchise Drawn on Wooden Blocks and a Hand Picking One
It would be great to be able 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. There are also many resources available for anyone who is looking for a franchise to buy. At All USA Franchises, we provide you with an informative AUF blog that's full of helpful articles and tips for franchisees. You'll also find the latest franchise news and the latest information about the 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 other franchises have managed to continue to survive due to their size and type of business model. Surprisingly, Statista's report titled, Estimated Number of U.S. Franchise Establishments Since 2007, shows that the number of franchises in 2020 will slightly increase post-COVID. This is in part 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 on a mission to help you find the right franchise for you for FREE!

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