Small businesses are the economic backbone of the United States.

They are the American dream for many. If your entrepreneurial spirit is starving, consider your own business startup or explore franchise businesses. 

Start up businesses can be challenging and exciting all at the same time. Finding the right franchise is also exciting. Investing in a franchise takes due diligence.

Business ownership is hard work. To be your own boss, evaluating your risk tolerance when exploring your options is essential. 

The major differentiator in starting a business from scratch is you have total control in making every decision. It can be overwhelming at times.

In your first year as a startup business, you will be responsible for creating your playbook, figuring out every single aspect of the company, from concept to legal to branding to marketing to technology to hiring to site selection, to business operations, sales, etc. This process can take some time to "figure it out" while burning through cash.

Going the franchise route, you're investing in a successful business model that provides a proven track record.  Tested systems and processes are your friend and lay your foundation. 

Franchises offer a playbook written for you, erasing the "figuring it out" part.

The startup time to launch a new franchise is significantly accelerated.

Here are 9 reasons that favor a franchise vs. startup business: 

1. Established Brand Recognition

Franchises with an established brand can jumpstart your entrepreneurial journey. A well-known brand can provide an instant reputation and customer base. 

2. Proven Business Model

Franchises help take the guesswork and experimentation out of starting a business with a proven business plan as a turnkey business. 

3. Proven Systems and Processes

Established and tested systems and processes streamline the day-to-day management of the business.

4. Community Support

Franchisees can plug into an existing network of fellow franchisees under the same brand to share what works and doesn't. Iron sharpens iron.

5. Training and Support

Franchisors provide a playbook to follow, equipping new franchisees with the necessary knowledge and skills to run the business successfully. 

6. Marketing Support

Franchises typically provide a marketing plan and support. Some franchises offer turn key, done-for-you marketing support. Other franchises will share the marketing playbook and the collateral (designed websites, ads, commercials, banners, flyers, etc.) needed to draw attention to your business. 

7. Economies of Scale

Franchises contract for services at scale and buy products in bulk which helps to reduce your operating costs. Thanks to their buying power, the discounts can significantly improve cash flow, increase your margins and improve your bottom line.

8. Less Risk

The established brand, proven model, ongoing support, and the community reduce the risk of failure vs. starting a business from scratch on your own.

9. Exit Strategy

Franchises often have an exit value of 1.5 times the price of a non-franchise business, per the Rinker School of Business. 

Success rate vs. failure rate

Reality is every business venture comes with risk. The good news is franchises generally have a higher success rate than startups due to the abovementioned reasons, notably the established systems, franchisor support, and the franchisor's community of franchisees.

Per the Small Business Administration(SBA), a typical startup failure rate in the United States can be as high as 50% within five years.

Per the International Franchise Association(IFA), franchises tend to have a higher success rate, with as high as 90% of franchises still operating after five years. 

There are many variables at play regarding success rates to consider, such as the franchise itself and the efforts of the individual franchisees. These statistics are not universal and can vary by industry, location, and personal circumstances.

Note - before you enter into any franchise agreement or make an initial investment in a franchise(or any business), validating the franchise opportunities of interest is very important. That's a critical part of the franchise & funding framework. 



What is the franchise & freedom framework?

Just as reputable franchises use systems and processes to help assure mutual success, the franchise & freedom framework is used to effectively and efficiently match franchise candidates with franchisors.

This system helps eliminate the guesswork for both franchise candidates and franchisors, leading to better franchise matches for both parties. 

Learn more:

Click to see the franchise & freedom framework

Click to learn about franchise funding.

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