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Franchise and the Risk of Failure

Written by: Sebastien Page

Article Overview: Failure is definitely a real possibility in franchising no matter how skilled a person is, especially since failure rates for small businesses are rather high, particularly in the United States.

Franchise and the Risk of Failure

Failure is definitely a real possibility in franchising no matter how skilled a person is, especially since failure rates for small businesses are rather high, particularly in the United States. Being in charge of your own business, while an exciting thought, may not be an easy feat no matter what line of work you’re in. In fact, failure should be treated the same way you treat any other competitor; with defiance and determination.

While failure rates for franchising in particular, are relatively low in comparison to other businesses, that doesn’t mean that failure isn’t a possibility. Small scale businesses have a tendency of coming and going on the radar of the business world along the years. The tendency of a large number of copycat businesses to appear following an initial spark of originality in the market doesn’t make things any easier when it comes to keeping your business afloat amidst the fierce and ever increasing competition.

The thing is, if you do succeed in competing with the numerous identical businesses around, that just means that you may have won the battle but definitely not the war. This because, likely an unbeatable mythical creature, you just kill it and ten more like it will pop up out of nowhere. This is mainly due to the unfortunate fact that for each innovator, there are about two dozen imitators waiting around the corner to steal ideas and then compete for rewards. However, the good news is that copycats will certainly not put as much heart and soul into their stolen ideas as much as the original creators do. If people are too lazy to come up with their own ideas, chances are they’ll be too lazy to follow any sort of ideas through to success. This leaves plenty of room to outrun the competition and defend your place in the market, even if this may take a while and an extra bit of effort.

That is mainly how the successes and failures are separated; by creativity, hard work and dedication. Keep this belief strong in your mind and you’re sure to have a successful business that will withstand the test of time and maintain a strong position in the ever changing and fickle marketplace. At the same time you will be able to maintain your integrity and self-respect as well as the unwavering respect of your peers.

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Article Tags: belief, business world, competitor, copycats, creativity, creators, dedication, defiance, failure rates, heart and soul, imitators, innovator, originality, own business, rewards, scale businesses, small businesses, successes and failures, tendency, unfortunate fact



Related Forum Posts
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]
These maybe the coldest franchises out there: - Here are the worst 15 performing franchises in regards to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops. WORST FRANCHISE LOAN FAILURES Failure % 1 OBEE'S SOUP SALAD SUBS 55.56% 2 LADY OF AMERICA 41.94% 3 COUNTRY CLUTTER (BED & BREAKFAST) 41.18% 4 COPY CLUB 36.36% 5 ALL TUNE AND LUBE 35.71% 6 PICKERMAN'S 35.71% 7 PHILLY CONNECTION 35.59% 8 ROLY POLY ROLLED SANDWICHES 34.78% 9 COTTMAN TRANSMISSION 34.48% 10 HAIR COLOR EXPRESS 33.33% 11 LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33% 12 GODFATHER'S PIZZA 33.33% 13 SMOOTHIE FACTORY 33.33% 14 BLIMPIE 31.39% 15 GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77% Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005
Re: Franchise Surveys - Another good tool to researching a franchise is to speak with their existing franchisees. This contact information is included in most Franchise Disclosure Documents. In order to get a Franchise Disclosure Document or FDD as it is often referred to, you will have to complete a basic franchise application. The franchisor will then usually provide you with the FDD at that time. Included in that book of information is a list of the existing franchisees, the contract, the investment information etc... This information is required by Federal Law to be disclosed to your prior to making a purchase. So be sure to do your research and start with the Franchise Documents to get the initial information.


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