Do You Want To Be A Franchisee Or An Independent Entrepreneur Before You Open A Store?

< p > the so-called "data" has been misleading franchisees for many years. Why is it difficult to get an accurate data to measure the survival rate of franchisees? < /p >

< p > assuming that you are considering resigning and joining a chain enterprise, you can find all the pros and cons of franchising through Google search.

Or you will find this conclusion on the Q & a website About.com: "some studies show that franchising companies have a survival rate of nearly 90%, while their own business success rate is only 15%.

Franchisees pay the franchise fee will bring a guarantee of success.

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< p > most experienced franchisees will be ridiculous to see this.

But if you are an entrepreneurial rookie and have no experienced entrepreneurs to help, then when you see these words, you will fall in love with franchises in an instant.

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< p > if you continue to study, you will find that About.com is not the only webpage that quotes such data, and the network is full of similar data.

Many people have written such an article, saying that how easy the franchise is, and the most widely spread is the franchise's "survival rate theory", that is, "the success rate of franchising can be as high as 90% to 95%", which makes franchising in the past 10 years continue to be hot.

But in fact, the theory of survival rate has never been proved to be true.

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What is the truth of < p > strong > "survival rate theory"? < /strong > < /p >

< p > the success rate of franchising and the success rate of independent shops are high. This should have great significance for the industry and entrepreneurs. However, no specific analysis has been made by any organization, nor can there be strong data support.

On the contrary, the survival rate is as high as 90% to 95%, which fills the gap in this field.

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< p > of course, false data have always been a common occurrence on the Internet, but they have caused great trouble to us.

Because franchising itself is a high-profile and high-profile industry, it is easier to get copyrights and copycats. It has become one of the strictest industries in the US regulatory regime.

More commentators believe that the success rate of up to 90% to 95% data is fabricated, the purpose is to allow more people to participate in the franchise.

In fact, this data has indeed accelerated the development of franchising objectively, because it is widely known, and many people believe that this is the guarantee of success.

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< p > 1994, the founder of the franchise and dealers association and Robert Purvin, a famous franchise lawyer, wrote the book "lies about franchising". He admitted that this was the first time anyone questioned the franchise's "survival rate theory".

"Even if the theory of survival rate is absolutely correct, people will concentrate on franchising and abandon their own businesses," said Purvin.

In addition, over the past few years, the protection of franchisees has become increasingly weak. "

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< p > of course, the emergence of the theory of survival rate is not entirely fabricated.

In 1980s, the US Department of Commerce conducted a voluntary survey of nearly 2000 franchisees.

The results showed that only 5% of the franchised stores failed during the 5 years of operation.

In other words, 95% of the franchisees survived.

But the problem is that not all invited franchisees are really involved in the survey. Usually, the franchisees who fail to join the franchise are less motivated to participate in the survey than the successful franchisees.

This means that many failed franchisees may not be involved in the survey, resulting in the lack of accuracy in the final survey results.

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< p > but since then, the theory of survival has spread like wildfire.

Although the US Department of Commerce has never made any related investigations since then, and the international chain store association has repeatedly asked the franchise to correct the false data online, Pandora's box has never been shut.

The small business administration has also raised rumours about this theory several times. The last proposal was in the autumn of 2012.

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< p > however, many industries involved in franchising are not so developed.

Joel Libava, who is a franchisee consultant, has written many articles criticizing the theory of survival rate.

"It is hard to imagine that many chain brokers hang up the" success rate of 90% to 95% "on the website.

He said, "survival rate theory" has misled potential franchisees.

It encourages people to take risks and make a wrong assessment of success rates. "

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< p > survival rate theory has been able to survive in all kinds of criticisms, mainly because no second official data can replace it.

The Small Business Administration issued a report in early 2000, saying that the number of loans owed by franchising companies was higher than that of independent entrepreneurs.

In the study, the most widely disseminated research was conducted by Wayne State University professor Timothy Batse in 1994.

He found that in more than 20500 small businesses, the franchise companies that could survive for more than 4 years accounted for 65.3% of the proportion of individual entrepreneurs, while small businesses which independently started and survived over 4 years accounted for 72% of the individual entrepreneurs.

In the retail sector, franchisees have performed worse, with a survival rate of only 61.3%, while independent firms have a survival rate of 73.1%.

Unfortunately, this kind of research has not been accepted by the public. People are still more willing to believe that "the franchise survival rate is as high as 90% to 95%".

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Brian Headd, the propaganda office of the US Small Business Administration, believes that these studies are too long to represent the current economic situation. < p >

In addition, he questioned the research on survival rate: "survival rate does not account for all problems. Enterprises must pay attention to costs and achieve balance of payments.

Just surviving for 5~6 years does not mean success. "

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< p > < strong > the larger the scale, the higher the success rate < /strong > < /p >.

< p > but why did no economists or franchisees make more effective research? Jania Bailey of FranNet, an affiliate agency, said that this is because it is very difficult to study franchising as a whole, and the research results may be of little practical significance.

She said: "there was a research survey of 3100 franchisees from 80 industries.

When you read this research report, you will find that there are both start-ups and mature enterprises.

The survival rate of the two franchisees is also very different. "

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< p > however, FranNet still hopes to assess the success rate of customers.

So last autumn, they surveyed 1500 individuals who had joined FranNet in 2006~2010 years.

The survey showed that 91.2% years after joining and opening stores, about 85% of the franchisee was still running, and 85% of the franchisee survived for more than 5 years.

But Bailey stressed that the survey results can only represent the results of FranNet's work and can not cover the whole franchise industry.

"The period of our investigation is exactly the worst economic period since the Great Depression of the United States," she said.

This success rate proves our ability. We can help everyone find their affiliate projects according to their strengths.

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< p > Libava was once a proxy agent of FranNet. He was skeptical about any research on franchising as a whole.

He believes that each case has its own uniqueness, and whether it should be successful is decided by the performance of franchisees, rather than the overall environment of franchising.

"I think a perfect franchise should take place in the best entrepreneurial stage of a franchisee's life. The franchisee is well funded and the location of the project is very close to him.

In this case, franchisees will be more likely to succeed through franchising than independent entrepreneurs.

But anything is not absolute.

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< p > Brian Headd has a more realistic view of "success".

His research shows that whether franchising or independent entrepreneurship, adequate capital can ensure that entrepreneurs survive longer.

"The bigger the start-up business, the longer it will survive," he said.

Setting up businesses on a larger scale can help entrepreneurs, but this requires higher costs.

As for whether to start businesses or franchises, these are the choices of entrepreneurs.

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< p > Purvin also believes that it is meaningless to integrate many unrelated enterprises together.

"Franchising is just a way to do business," he said.

The successful way of doing business yesterday will not necessarily succeed tomorrow.

For example, McDonald's, 30 years ago, they only had hamburgers and milkshakes, and now they are more like a coffee shop.

Enterprises need continuous innovation, and any self preservation will be eliminated by the times.

Entrepreneurs who want to join the franchise need to choose their joining projects carefully, joining a project with no sense of innovation is not a shortcut to success.

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< p > is franchising more successful than self startups? Bailey thinks that franchising may be more secure than independent entrepreneurship to a certain extent, but she can not quantify the success rate.

"I think the main reason why the public is optimistic about franchising is that this kind of business really helps some people succeed.

The franchisee is supported by headquarters and will gain experience from other franchisees.

Compared with independent entrepreneurship, you have backing support. "

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