Franchisees Can be More Successful

A British study again shows that franchised businesses have a lower failure rate.

"Research by NatWest and the British Franchising Association found that while in the first five years of trading 80% of independent start-ups fail, over the same period more than 90% of franchises succeed.

"There’s a whole range of reasons why franchises seem to perform better than start-ups. The main reason for small firms floundering can be linked to failure in securing finance for start-up and running costs to get the business off the ground.

"For franchisees, securing this capital is easier as, to put it plainly, banks like them. The big money lenders have also noticed the difference in the failure rates of independent start-ups and franchises. To them, franchises pose a far smaller risk, so they are willing to lend greater sums.

"Brand loyalty by customers and the corresponding value brought to a company should not be underestimated. Many people are creatures of habit, and as consumers we may be more inclined to decide against an unknown quantity for a company we know to be of high quality, successful and reliable." —Western Mail, Wales, UK

And we would add that certainly some of the reasons franchised businesses are more successful are that they follow a proven model, they don’t "go it alone," and they don’t have to lose money and time "reinventing the wheel or going down "dead-end paths."  In one sense a franchisee pays to "get up to speed" and learn what it took the franchisor a great deal of time and money to learn.

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