Why You Should Invest in a Franchise over a Startup

Tuesday 26th September 2017


When you are looking to go into business, you have an important decision to make. Do you take your business idea and build your empire from the ground up, or opt for the franchising route? Both have pros and cons and neither guarantee success, however when comparing the two, it becomes clear why franchising is proving to be such an attractive business move for entrepreneurs.

Lower failure rates

Failure isn’t something any business owner wants to think about, but it’s often the difference in failure rates between franchised businesses and startups that is the deciding factor for those who are unsure of what route to take.

The latest BFA/NatWest Franchise Survey stated that failure rates are considerably lower for franchised businesses, relative to Small Medium Enterprises (SMEs). This follows a report from About.com who highlighted studies which showed that franchised businesses have a success rate of approximately 90 percent, compared to approximately 15 percent for startups. Looking further at SMEs, Fundera Ledger shared interesting statistics about the success rates of new startups:

- Two-thirds of businesses survive their first two years
- Half of all businesses will survive five years
- One-third of businesses will survive ten years

Not only does the success of franchised businesses tick an important box for future business owners, but banks also see it as a strength, meaning they are generally more favourable towards franchises over new businesses when it comes to funding.

Proven business model

One of the most talked about benefits of franchising is the bonus of being able to operate a well-established, tried and tested business model. This is of course something that you don’t get when launching a startup.

Becoming a franchisee does require the payment of a licensing fee, however this fee gives you the right to use the name and operational model of an existing brand, automatically boosting you into a stronger position within the industry. So whilst you might have more freedom by running your own business, it’s important to consider how long it will take to become established. With franchising, that’s already taken care of.

Full business support

In addition to operating a proven business model and lower failure rates, deciding to work with a franchisor also offers a level of support which doesn’t exist when starting your own business. Depending on the franchisor, it’s likely that you will also be provided full training, business planning help, HR and marketing support, access to a wider network of established and experienced franchisees, as well as the option to attend networking events, all of which is hugely beneficial to every new business in any industry.

Are you ready to find out more about what opportunities franchising could bring you and your business? Fill out the form below to receive an information pack.