Starting a new company, no matter if it’s a franchise or your own startup, is going to require a lot of time, money and risk. So choose wisely.
In a study conducted by FranNet, it was concluded that 92 percent of franchises were still in business after two years and 85 percent after the first five years. Compare that to independent businesses: Investopedia reports that 25 percent fail within their first year. 62% fail within their first 5 years and 88% fail within their first 10 years.
Bottom line, franchises have a higher overall success rate than startups. Franchises operate under a predetermined business model that has already been tweaked and adjusted until it was successful and profitable while independent business owners must create this model on their own and at their own expense.
However, not every franchise is a safe bet and not every independent business is destined to flop, which is why it is so important to do your research.
Individual franchise success rates vary from as low as 40 percent to as high as 100 percent. Be sure to investigate the success rate of any franchise that you are looking into and talk to franchisee owners.
As for independent businesses, remember that there are countless success stories: Starbucks is a successful company that started out as small businesses.
Maybe yours will too?
