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Lenders and agencies like the Small Business Administration are very aware of the comparative success and failure rates of independent startups and new franchises.  They know that franchises are much more likely to succeed. 

Franchise borrowers bring detailed business plans and the collective experiences of their franchise systems to the financing table.  Lenders further recognize that franchisees will be trained to the industry’s highest standards and will not be learning the new business by trial and error. 

Prospective franchisees also have full access to the franchise’s current and past owners.  That means they can conduct extensive research into the performance of those units and include the data in projections provided to lenders.  Franchise loan applications will be based much more on actual facts and experience than the speculative numbers often submitted for most independent startup ventures. 

Find the Model “Right” for You

As the above points illustrate, franchises can be superior business models for individuals wanting to start new ventures.  However, franchisors tell applicants everyday that franchising is not necessarily for everyone.  Some people only will be happy waging the battle of starting new independent enterprises on their own.  Those entrepreneurs need to be prepared for long, hard struggles, and to take advantage of all appropriate professional assistance.

Other entrepreneurs will find that a franchise model’s inherent advantages and systematic approach to business provide greater chances of success and profitability.  Because business growth is more predictable and steady, owners often find that franchises ultimately give them more time to enjoy life and make personal goals more attainable.

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