FRANCHISE
Franchises versus start-ups
Franchises versus
– the truth about
It can be difficult to separate fact from fiction when researching franchising,
says Dynamis’ Matt Skinner
I
Some
franchise
brokers will
claim that
franchises
have a 90%
success rate,
compared to
a mere 15%
for businesses
started from
scratch
120 September 2014
FRANCHISE_TB36_dynamis.ga.indd 120
f you spend time on the
internet researching the
potential success rate of a
franchise compared to a startup, you will come up with a
barrage of conflicting arguments.
Representatives of independent
businesses tend to refute claims
that the franchise system is
virtually fool-proof, whereas some
franchise brokers and consultants
will claim that franchises have a
90% success rate, compared to a
mere 15% for businesses that were
started from scratch.
This statistic, originally put
out by the US Department
of Commerce in the 1980s,
has enjoyed continued
outings despite being discredited
by the International Franchise
Association as well as the SBA
(Small Business Administration)
in recent years.
The truth is tremendously
difficult to quantify as longevity,
return on inv