Why Consider a Franchise?
Franchising is a business model with the primary purpose of risk minimization. Every study ever done on the success rate of new (non-franchise) business startups concludes the same thing. Starting up a new business is very risky. Most studies show that more than 90 percent fail within three years. The primary reason that the failure rate is so high is the learning curve of operating that specific type business. Unfortunately, the market place is not very tolerant of the inexperienced beginner trying to learn how to operate a new business. If you canít compete in the marketplace, you can lose your money, your credit, your home, your reputation and sometimes even your family. Failing in business can be a horrible experience. Unfortunately this happens to thousands of people every year in the United States, and it can be avoided. Unless you have considerable experience in the specific type of business that you are considering going into, it is very probable that you will fail.
Business format franchising is as close as you are going to come in todayís marketplace to a guarantee of success. All of the studies done have found that franchise new business startups rarely fail and, when they do, it is typically because the franchisee did not stick to the franchisors systems. There is a learning process involved in all human endeavors.
Another very important reason to buy a franchise is due to its basic nature. Franchising inherently leads to rapid growth, because the franchisees provide the expansion capital. There are few restraints to growth in franchising. As a franchise system expands into hundreds of units, many positive things begin to happen. The name begins to become well known because people see it everywhere. Most people associate size with success.
A recent Gallup Poll of franchisees found that more than 94 percent considered themselves successful and that more than 75 percent would buy their franchise again if they had it to do over. The same poll also found that the average pre-tax gross income was $124,290.
The primary reason you should buy a franchise as opposed to starting up a non-franchise new business, is to minimize risk and enhance your chances of success.