How do I know the performance of a franchise?
How do I know the performance of a franchise? It’s been reported that a new franchise opens every 8 minutes every business day according to a quote on the International Franchise Association website. There are other facts and these include:
The franchise industry accounts for 40 per cent of all retail sales in the United States
One out of every 12 businesses is a franchise
Franchises generated more than $1.2 trillion dollars in sales in 2007 per the US Census Bureau
Franchises account for 8% of service businesses but they claim 40% of all service-related revenue
Franchises provided 9,125,700 jobs or 6.2% of the US private nonfarm workforce in the US in 2007 per the US Census Bureau
And so it goes on.
It would therefore seem logical that buying and operating a franchise guarantees you will be successful.
Unfortunately, that is not the case.
Franchises can fail for many reasons. These include taking the concept to market too early, the concept takes off quickly but the industry the franchise is in is only a fad and customer demand dies and so does the concept, poor management by the franchisor and other reasons.
Knowing if a franchise is successful helps a franchise buyer manage their risk. A valid and extremely useful bit of information comes from looking at how a franchise performs or more specifically, how a franchisee performs if they obtain an SBA loan.
The SBA put together a report over a ten year period, from October 01, 2000 to September 30, 2010 and included all SBA loans approved to franchise buyers, that is, both 7A and 504 loans. They broke includes the number of SBA loans that were approved, the per cent of franchisee failure rate and the average loan amount.
How do I know the performance of a franchise?
If you are considering buying a franchise and would like to know the rate of failure of the franchise, you are welcome to view the following report. It was made available with the help of Bob Porter at Plumas Bank in Auburn, CA. To see the report, simply click the following link – Performance of a franchise
If you have an interest to buy a franchise and are not sure where to start, please give me a call on 916 570-2674. If you would like some more information, buy a copy of my book “Successfully buy your franchise” then give me a call so I can help you make sure the right franchise is available in the area where you live.
