The Franchising Advantage: How It Outperforms Start-Ups in Business Success

As the president of the National Franchise Association, I have seen firsthand the growing success of franchises over start-up businesses. In fact, according to the International Franchise Association, franchises have a success rate of over 90%, while non-franchised businesses have a success rate of only 20-30%. This stark difference in success rates raises the question: why do franchises succeed more than start-up businesses?

First and foremost, franchises have a proven business model. By purchasing a franchise, individuals are buying into a system that has been tested and refined over time. This includes everything from marketing strategies to operations and employee training. Franchises also have a recognizable and trusted brand, which can give them a competitive edge over start-up businesses that are still building their brand from scratch.

In contrast, start-up businesses often must start from the ground up, developing their own business model and brand. This can be a time-consuming and costly process, and many start-ups fail before they even have a chance to establish themselves in the market.

Another factor that contributes to the success of franchises is the ongoing support and training provided by the franchisor. Franchise owners have access to a network of experienced professionals who can provide guidance and assistance. This support system is especially beneficial for entrepreneurs who may not have previous business experience. In contrast, start-up business owners may not have access to such resources and are left to navigate the challenges of entrepreneurship on their own.

Furthermore, franchises benefit from the buying power of a larger organization. By being part of a larger network, franchisees can negotiate better deals with suppliers and enjoy lower costs for goods and services. This can result in higher profit margins and a more stable financial foundation for the business. Start-up businesses may struggle to secure competitive deals due to their smaller size and lack of established relationships.

Additionally, franchises have a built-in customer base. This is due to the brand recognition and reputation of the franchise. Customers are often drawn to franchises because they know what to expect and can trust the quality of the product or service. This existing customer base can give franchises a head start in generating revenue, while start-up businesses have to work harder to attract and retain customers.

It is also worth noting that franchises have a lower failure rate. This is because the franchisor has already worked out the kinks and potential pitfalls of the business. Franchisees benefit from this expertise and are less likely to make costly mistakes. In contrast, start-up businesses are more susceptible to making costly errors, which can lead to their downfall.

In conclusion, franchises have a higher success rate than start-up businesses due to their proven business model, ongoing support and training, buying power, built-in customer base, and lower failure rate. While starting a business can be a daunting and risky venture, purchasing a franchise offers a more secure and potentially more profitable option. So, if you are an aspiring entrepreneur, consider the benefits of buying into a franchise and increase your chances of success.

Sources:

1. https://www.franchise.org/research

2. https://www.nfib.com/content/resources/start-a-business/why-start-ups-fail-statistics/

3. https://www.forbes.com/sites/verified/2018/12/07/why-franchisees-succeed-more-than-independent-business-owners/?sh=60c6bb881c48

4. https://www.businesswire.com/news/home/20180801005696/en/International-Franchise-Association-pa

5. https://www.entrepreneur.com/article/223352

As the National Franchise Association, we are committed to supporting and promoting the success of our franchising industry. By providing valuable resources, education, and advocacy, we strive to help franchises thrive and grow. We believe that the proven success rate of franchises speaks for itself and contributes to the overall economy and job market. If you are interested in getting involved in the franchising world, whether as a franchisor, a franchisee, or a franchise sales advisor, please don't hesitate to contact us for more information and support. We are dedicated to helping you achieve your entrepreneurial dreams and becoming a successful part of the franchising community. Let us help you increase your odds of success and join the booming franchise industry today.

Best Regards,

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Michael G. Bullinger, MBA, CFC, CFA

President of the National Franchise Association

call/text: 504-345-1170 or 484-467-4869

Schedule at: calendly.com/bullingermg/

[email protected]