"The Master value is trust. There are no relationships that can survive for very long without it."

- Jim Amos

FranNet Survey Shows Why Franchises Outperform Other Small Business Owners

June 8th, 2012

New data proves assumption that franchise businesses are more likely to succeed

Franchise veterans have known for decades that small business owners are more likely to succeed within a franchise system, and for the first time in recent times, we have the numbers to prove it.

FranNet Franchise Survey 2012

FranNet, an international group of franchise consultants who match entrepreneurs and franchise systems, recently surveyed  1,260 franchises it helped open from 2006 to 2010 to see how many were still in business.

Franchise Businesses Succeed Despite Economy

Despite facing the worst economy in 80 years, 91 percent of the franchises were still in business after two years. By contrast, when the U.S. Small Business Administration and Census Bureau studied small businesses a decade ago, during much better economic times, they found that just 64 percent of small businesses survived the two-year mark.

After four years, only half of small businesses survived, according to the Census Bureau data, which tracked the year-by-year survival rates of businesses founded in 1992. FranNet, by comparison, found that 85 percent of the franchise businesses it helped start in 2006 were still operating five years later. That’s a huge difference. Franchises succeeded at a 42 percent higher rate than typical small businesses.

Reasons Franchise Businesses Outperform Most Small Businesses

Why are franchise businesses so much more successful? I can cite a number of reasons based on my career in franchising:

• Franchisees utilize a systemized way of doing business. Their business model has been tested by a company with a track record, established operations and a recognizable brand.

• Franchise systems often have brands that inspire trust. Customers seek out trusted brands,, which means franchisees generally have an easier time acquiring new customers.

• Franchise systems rely on quality, uniformity and consistency. Otherwise, they fail. Customers like dependable brands that deliver predictable products and services, every time out.

• Franchisees don’t have to go it alone. The franchisor provides training and support, and other franchisees are willing to offer advice and help, since they know what the new franchise owner is going through. Any experienced franchise owner will tell you that support from fellow franchisees can make the difference between success and failure.

• Franchise systems can save on marketing costs by duplicating materials and dividing the expense among many franchise owners. Depending on the franchisor’s size and target market, it can direct its marketing to a local, regional or national audience, ensuring maximum impact and efficient use of marketing dollars — a key for any business.

Any one of these advantages is reason enough for entrepreneurs to purchase franchises instead of starting business on their own. Taken together, they make a great case for the benefits of franchising — and thousands have already ruled in franchising’s favor.

I’m glad FranNet had the skill and initiative to compile this incredibly revealing and valuable information. It shows with great precision why so many people are choosing franchise ownership, and why franchising is growing more and more prominent in the American economy.

Tasti D-Lite chairman and CEO Jim Amos has more than 30 years of experience guiding successful franchise companies such as Mail Boxes Etc. He was inducted into the International Franchise Association’s Hall of Fame in February.

10 Comments

  1. Posted June 8, 2012 at 5:48 pm | Permalink

    Jim,

    Thank you for your comments! We were very pleased to gather and report the data.

    Jania Bailey
    President
    FranNet

  2. Posted June 8, 2012 at 7:53 pm | Permalink

    Thanks for sharing this info Jim. FranNet is proud of the results and we feel it’s valuable info for anyone who is considering investing in a franchise!

    Stacy Swift
    FranNet CO, WY, & MT

    • Jim Amos
      Posted June 11, 2012 at 4:28 pm | Permalink

      You are very welcome.

      Jim

  3. Posted June 8, 2012 at 8:16 pm | Permalink

    Jim,

    Thank you for sharing FranNet’s findings and your insights. My first experience with franchise ownership was with Mail Boxes Etc.; as a young entrepreneur the support and training I received through a strong system was critical to my growth. I could not have done it alone.

    Leslie Kuban
    FranNet of Georgia

  4. Posted June 8, 2012 at 8:19 pm | Permalink

    Ensuring clients are the right fit for a particular franchise is key. I am proud to be part of an organization that achieves this by doing all possible to understand short, long term and financial goals of clients. I have never been involved in a business where “No” was an acceptable answer.
    This process obviously works. Jim, we thank you very much.

    Mark Moorman
    FranNet DFW & OK

    • Jim Amos
      Posted June 11, 2012 at 4:30 pm | Permalink

      Mark,

      You are very welcome. You folks are doing great work.

      Jim

  5. Posted June 9, 2012 at 12:20 am | Permalink

    Jim: As a former Mail Boxes Etc Master Franchisee and current FranNet Associate, I want to thank you for your great insights into the world of franchising. You have a great perspective on franchising that is truly appreciated and respected.

    • Jim Amos
      Posted June 11, 2012 at 4:29 pm | Permalink

      Page,

      Thanks for you kind words. My very best to you.

      Jim

  6. Posted June 9, 2012 at 7:20 pm | Permalink

    We have long believed that our matching process creates even greater safety for franchise buyers beyond the high success rate of frnachising in general.

    It is great to see the proof.

  7. Gerald Moriarty
    Posted June 16, 2012 at 7:14 pm | Permalink

    Jim, after 23 years with Midas, the automotive experts, I joined FranNet. In my field days with Midas, I was very careful awarding a franchise to a candidate. A mistake there would have dreadful consequences for the candidate – and Midas! One thing that attracted me to FranNet was the ethics of the organization. FranNet was not “selling franchises” – in fact, we never hand any piece of promotional material to a client What we do is just like what a top executive recruiter does for a corporation seeking a high level manager or executive: we look for candidates that fit exactly what the company – in our case, a franchisor – needs to successfully get the job done. Our reputation is on the line with every referral. I am pleased the survey shows that we have been making the right referrals! We take great pride and pleasure in the success of our referrals.

    Jerry Moriarty

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  1. […] veterans have the skills they need to succeed as small business owners, especially within a franchise system, but — even with discounts — they sometimes have difficulty putting together the money to start […]

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