Franchise Opportunity Or Small Business Opportunity?

NuWire Investor:

Many potential franchisees are lured into franchising opportunities by the often-cited statistic that 9 out of 10 franchises succeed while 9 out of 10 small businesses fail. That statistic comes from a study done by the Small Business Administration (SBA), according to the Boston Globe, but another study, also done by the SBA, shows that within 12 years, 75% of new franchise systems fail.

With such conflicting numbers, it can be difficult for investors interested in owning a business to determine whether purchasing a franchise and becoming a franchisee is a relatively secure investment or whether, since franchising is not in fact the risk-free investment opportunity it is sometimes made out to be, it would be better to start a business of their own.

What it might come down to is the personality of the individual investor. There is going to be risk involved no matter which method investors choose. But the benefit of purchasing a franchise is the proven system and the support offered by the franchisor.

‘Franchising offers franchisees the advantage of starting up a new business quickly based on a proven trademark and formula of doing business, as opposed to having to build a new business and brand from scratch (often in the face of aggressive competition from franchise operators),’ Dave Meholovitch wrote in an article for BusinessMart. Read full article.