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When I talk to people about franchising, the great majority who tell me they don’t want a franchise know little to nothing about franchising. They automatically think about Chick-fil-A, Taco Bell, Subway, or McDonald’s. Certainly, the mind immediately goes to restaurants. But there are hundreds, no, thousands of franchises out there. Dozens of industries in all different sectors. If you just keep an open mind to learn more about franchising, you will find that it is an amazing way to
become a business owner.
Some tell me they don’t like all of the “fees”. I understand this to a point, but most don’t realize that most of what they think about in the upfront and even ongoing costs are not fees, but the normal cost of doing business. When you look closer, you realize most of this goes into the daily cost of having your own business. Most of the expenses have nothing to do with the franchise itself. Franchising lays out all of the possible costs up front in the franchise disclosure document, so you know about it up front instead of finding out later.
Let’s take a closer look at franchising and why, for most people, franchising is the best way to go into business ownership.
This is what I found doing a Google search. I posed the question this way. “What are the percentage statistics of a person becoming a franchisee and then staying in that franchise for one year, five years,
and ten years”?
This is what the Google AI answer produced: Franchises generally show higher survival rates than independent businesses. After one year, a substantial majority of franchises are still operating, with around 92% surviving past the two-year mark. After five years, this rate is still high, with about 85% of franchises still in operation. And while a significant portion of franchises remain active for over 10 years, it’s harder to find specific percentages for that timeframe, but data suggests a significant percentage stay in business for 5-10 years and even longer. What if you start your business from scratch? Here are those statistics:
Year 1: A significant number of new businesses fail within the first year, with some sources reporting as high as 23%. Year 5: Roughly 48% to 50% of new businesses fail within the first five years. Year 10: Around 65% of new businesses fail within the first ten years. Purchasing a business or even getting a job doesn’t have success rates that franchises have. The average tenure of staying in a job for a man is 4.1 years and 3.6 years for a woman. Even purchasing a business only gives you a 50/50% chance of surviving five years, with only approximately 34% surviving ten years or longer.
For the first time in history, more Millennials are seeking franchise ownership than Baby Boomers. While Generation X (ages 41-56 in 2021), has shown the greatest share of franchise interest for some years, that share may have peaked in 2020 at 48.2%, based on year- to-date data in 2021 through June.
A large percentage of the population has thought about business ownership and or franchising. If you happen to be one of them, doesn’t it make sense to at least explore options that give you the highest percentage chance of success? Virtually everyone who has reached adulthood has had times when they look back and ask, “What if?”.
It doesn’t cost anything to explore the possibilities. If you would like to learn more any franchise or brand, contact me here, or schedule a call with me.
By Rick Schell
