What is the Success Rate for Franchises?
FranNet survey shows franchises outperform other businesses
New business owners are far more likely to succeed if they are part of a franchise system. Everyone in the franchise industry has known it for decades, but until recently there wasn’t a lot of data to show just how big a boost franchise systems provide. Thanks to FranNet, solid data is finally available.
Last year, I joined other FranNet franchise consultants in conducting a detailed survey of the 1,260 North American franchises that FranNet helped open between 2006 and 2010. The survey showed that 91.2% of the franchises FranNet helped open were still in business after two years, and 85% remained open after five years. Keep in mind, the bulk of these businesses are located in the United States and started up just before or in the midst of the Great Recession — and still, 85% were in business after five years.
FranNet’s statistics can be contrasted against information from Industry Canada. According to its 2010 report “The State of Entrepreneurship in Canada,” 49% of businesses started in 2001 were closed by 2006, and Industry Canada described the 50% mortality rate as “to be expected.”
So, to recap, Canadian small businesses overall had a 49% mortality rate from 2001-2006, while 85% of the franchise businesses that consulted with FranNet survived the economic meltdown of 2006-2010. When you consider that the 2001-2006 economic period was substantially stronger than from 2006-2010, this speaks volumes about the strength of franchising when owners are well-matched to their optimum franchise.
How franchising helps you succeed
Franchise systems help new business owners succeed in myriad ways. They provide a proven business model for the franchisee to duplicate. They provide training so you start with a firm understanding of your new business. They provide support so that when you have questions or difficulties, you have someone to turn to for help. They provide a brand name that engenders trust. They provide a marketing strategy designed to bring customers to your business. They offer access to veteran leaders who stay abreast of industry trends and opportunities and ensure that your products or services stay competitive.
Sometimes, a franchise helps candidates by saying “no.” Not every person is ready for every system, and well-managed franchise systems carefully gauge the strengths and weaknesses of potential franchisees, looking for those who will have the best shot at success. Fortunately, there are more than 1,000 franchise systems operating in Canada in more than 80 industries, and they are looking for franchisees with different financial resources, different skills sets and different personalities.
My job is to help you sort out all those opportunities. Franchising is a fantastic tool to improve your odds of owning a successful small business, and the key to achieving the most success is to find a franchise you love that will allow you to meet your financial and personal goals.
I hope you’ll give me a chance to guide you as you consider all of the Canadian franchise opportunities that are out there. To contact me, click here.