Detailed survey results prove 42 percent higher success rate for franchises over startups
Need proof that FranNet helps entrepreneurs not only go into business but thrive?
We’ve got it, from a survey we conducted — and it’s some of the most exciting statistical information about the franchise industry we’ve seen in years.
The survey shows that 91.2 percent of the franchises we helped open from 2006-10 remained in business after two years, and 85 percent were still in business after five years.
Those are absolutely staggering numbers that way surpass any other small business success rate. They also represent a critical statistical benchmark in an industry that suffers from a lack of good, solid information about the likelihood of small businesses to succeed.
Until now, the best concrete information we had was, incredibly, about a decade old. In 2002, the U.S. Small Business Administration’s Office of Advocacy asked the Census Bureau for a special tabulation that showed the success rates of new businesses founded in 1992 over time; what percentage was still in business after one year, two years, five years, etc.
The data showed that 64 percent of businesses that opened in 1992 were still in business in 1994; 50 percent in 1996; and only 29 percent in 2002. For years, although it was generally accepted that franchises survived at a much higher rate than startup businesses, we didn’t have any hard data to back it up.
Now we do. We recently finished a detailed survey of 1,260 franchisees who consulted us before they bought their franchise businesses. Again, do the math — 64 percent two-year success rate for businesses, according to the Census; 91 percent for franchises FranNet helped. Over the first five years, half of businesses fail. Those that consulted with FranNet beforehand survived at an 85 percent clip. What’s more: Of the franchises we helped open, 15 percent became top performers in their franchise systems.
What’s especially impressive is that the Census figures cover a period of relatively high times, the boom years of the 1990s, when the chances of business success were pretty good. By contrast, the FranNet survey years of 2006-10 encompassed the worst economic climate since the Great Depression — and our franchises still performed spectacularly!
Naturally, we’re thrilled because now we have a sound statistical foundation for what we’ve been saying for the 25 years we’ve been in business as a franchise system ourselves: that franchising is a nearly foolproof way for an entrepreneur to build a fulfilling career and realize the benefits of self-employment.
Franchise ownership is on the rise. The International Franchise Association has predicted that more than 14,000 new franchise units will open in 2012, creating 168,000 new jobs. FranData, a franchise consultancy firm that collects industry data, reports that the average franchise unit produces 10 new jobs. The better systems, training and brand awareness of franchise systems produce both a better financial investment and less risk for anyone thinking about opening a new business.
Franchising is an increasingly attractive option for so-called “corporate refugees” tired of the unpredictability and rigidity of their jobs and longing to seize control of their careers. Franchising appeals to them because franchise systems have already worked out the blueprint for running the business, greatly increasing the chances of success.
And the results are showing. We posted a record year for franchise openings in 2011 and, in the first quarter of 2012, we helped 33 percent more people start a business than the year before. Our clients don’t just survive. They thrive.
Want to see for yourself just how much sense owning a franchise business can make? Visit us at www.frannet.com.
Interesting information. Was the study completed by a third party and if so who? As in accounting, numbers are suspect unless provided and audited by non-interested party. At first I thought it was from Frandata reporting but this is so self-serving it becomes suspect.
May I please see a copy of the survey results? Thank you.
Thanks for your interest in FranNet. This was some very telling research. We always knew FranNet placements did very well, but this research validated and delighted us just how well our placements did. In addition to the more than 91% still open after two years, nearly 15% of the FranNet placements are Top Performers in their respective franchises. This data was gathered directly from our franchisors with whom we work. And because we do not publicly disclose our franchise partners, we cannot share the individual details of the report to maintain their privacy. We hope you understand how valuable that trust is that we maintain with our franchisors.
I like the info and I would like to talk to u about these businesses that you have to show me ‘; thank you mr bird
[...] recent survey results on how successful business owners who have used FranNet are compared to regular startups is getting [...]
[...] franchise world is still abuzz over the news FranNet broke a few weeks ago: that entrepreneurs who use FranNet as their “franchise matchmaker” succeed at a rate 42 [...]
[...] franchise world is still abuzz over the news FranNet broke a few weeks ago: that entrepreneurs who use FranNet as their “franchise matchmaker” succeed at a rate 42 [...]
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[...] business. Certainly, you have a better chance of success than you would with a regular startup — we have the statistics to prove it — but you still have to work really hard at it, and if the motivation isn’t there, you [...]
[...] Matchmaking. Back then, franchise consultants were far less developed in their approach to matching entrepreneur with franchisor — if the buyer had enough money and seemed interested and competent, that was about it. But franchisors have learned the hard way that capitalization is just one part of the equation. Much smarter and more targeted approaches by franchisors have led to far better “fits,” and they’ve paid off: Franchise owners who use FranNet succeed at a 91 percent rate. [...]
WOW!
That success rate is amazing.
Almost sounds too good to be true.How did you come up with 90%?
Edgar Malley
Hi Edgar!
Yes, the results are amazing. We’ve always known our placements did very well, but we wanted to quantify it. So we simply polled all our franchisor partners with which we work and asked them to help us piece together this critical information. In all, we surveyed 1,260 franchisees who had worked with us before they became franchisees of their respective businesses — and more than 91% were open for business after two years. And of those, nearly 85% were in business after five years. They’re very telling results to understanding who is a right fit for which franchise system. I hope that helps! Thanks for your interest in FranNet!
[...] national brands. Entrepreneurs who use us succeed at much higher rates than typical startups; our recent survey of more than 1,000 former FranNet clients revealed 85 percent were still in business after five [...]
[...] national brands. Entrepreneurs who use us succeed at much higher rates than typical startups; our recent survey of more than 1,000 former FranNet clients revealed 85 percent were still in business after five [...]
[...] shown how franchise businesses fare better than typical small [...]
[...] shown how franchise businesses fare better than typical small [...]
[...] Matchmaking. Back then, franchise consultants were far less developed in their approach to matching entrepreneur with franchisor — if the buyer had enough money and seemed interested and competent, that was about it. But franchisors have learned the hard way that capitalization is just one part of the equation. Much smarter and more targeted approaches by franchisors have led to far better “fits,” and they’ve paid off: Franchise owners who use FranNet succeed at a 91 percent rate. [...]