Beware of Bogus Franchise Statistics

The old computer cliché “trash in, equals, trash out” applies to bogus information readily available on the web. Nothing irks me more than unsubstantiated franchise statistics that are quoted all over the internet.  Some of the bogus statistics listed below can be found on multiple websites. I was unable to verify or validate any of the statistics listed.

Some of the unsubstantiated franchise statistics quoted are:

• Eighty-five percent of non-franchised businesses will not survive over 5 years!
• In the first five years it is estimated by the International Franchise Association that only 5% of franchise businesses fail in the first five years.
• The U.S. Department Of Commerce States That 90% Of Franchises Are Still In Operation After 10 Years, Compared To Just 18% For Other Forms Of Small Business
• A 1999 Study By The U.S. Chamber Of Commerce Found That 86% Of Franchises Opened Within The Last 5 Years Were Still Under The Same Ownership And That 97% Of Them Were Still Open For Business
• A U.S. Department Of Commerce Study Conducted From 1971 To 1997 Showed That During That Time, Less Than 5% of Franchised Businesses Were Closed Each Year
• In 2000, the Median Gross Annual Income, Before Taxes, Of Franchisees Was In the $75,000 to $124,000 Range, With Over 30% Of Franchisees Earning Over $150,000 Per Year
• A U.S. Small Business Administration study conducted from 1978 to 1998, which found that 62% of non-franchised businesses closed within the first 6 years of their existence due to failure, bankruptcy, etc.

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