My Franchise Business Advice For The Week Of April 19th, 2010

This week’s franchise business advice is for the media;

Statistical Studying

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When interviewing alleged franchise experts, please don’t get caught up in in some of the old franchise spin on success rates in franchise businesses. The statistics that were bandied around for years just don’t apply anymore.

A couple of months ago, a franchise broker from a nationally known franchise brokerage was interviewed on a nationally televised business news show. She said that “80% of franchise businesses succeed vs. non-franchise businesses.” Not.

Even the totally pro-franchise International Franchise Association felt pressured into putting a letter up on their own website, in 2008, I believe. Here’s some of it;

“It has come to our attention that some IFA-member companies may be providing information about franchising that is long out of date and no longer presents an accurate picture of the sector. Of particular concern is information claiming that the success rate of franchised establishments is much greater than that of independent small businesses.”

The letter also states that “many years ago, the U.S. Department of Commerce conducted studies about franchising which presented such statistics. That information is no longer valid. The agency stopped conducting such studies in 1987. We strongly urge you to remove any information from your Web site and published materials that make such a claim. The use of such data, in the absence of current research, could mislead prospective franchisees who are attempting to conduct responsible investigations.”

Here’s an article that discusses old vs. new statistics…

The business model of franchising is a great one. But, as I’ve stated before, it’s not for everyone, and there’s no guarantee of success. Facts are great things to have, in these transparent times.