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U.S. Franchise Unit Turnover Rate Is 122 Percent

A shuttered Cold Stone Creamery franchise
A shuttered Cold Stone Creamery franchise. Photo/bmm

WASHINGTON – New research shows that the turnover rate for franchise outlets in the United States over the last four years from the beginning of 2010 to the end of 2013 is 122 percent, with more leaving than opening. The good news for the industry is that franchise outlets have grown at a pace just shy of one percent a year since 2010, according to disclosure filings.

A Minimum Wage For Franchisees?

In the national debate surrounding the minimum wage, advocates on both sides of the issue use small franchised businesses like sandwich shops as example of small businesses that will be affected by an increased minimum wage. Opponents argue that these businesses are operating on thin margins and claim any increase in the minimum wage would be disastrous.

Buying: Will the Brand Bring More Consumer Buys than Franchise Fees?

Golf Etc logo from a Midwestern store, photo by Blue MauMau
Sign of a once opened Golf Etc, ranked #1 worst by loan defaults

Business adviser Bob Papes has an interesting insight. His emphasis is less on buying a franchise because of training and support by the franchisor. He sees problems in buying a business in a box. After all, it could also be a ready-made bankruptcy in a box.

Be Wary of Franchise Churning

Don't be a victim of churning, a type of franchise fraud. Consult a franchise attorney before you invest in a franchise. The FBI website explains franchise churning:

Be Wary of the Passionate Franchise Founder

When visiting a franchisor’s headquarters franchise candidates look forward to the opportunity to meet with the person who founded the franchise.

Renewal Provisions: What A Prospective Franchisee Should Do

A prospective franchisee needs to retain an experienced franchise attorney to review all of the terms of the franchise agreement including the renewal provisions.  If the typical renewal provision is in the franchisor's standard form of franchise agreement, try to renegotiate this provision to make it fair.

Five Week Franchise Research Plan

So here we have it; The Five Week Franchise Research Plan, the ‘KISS’ principle to researching a franchise investment - Keep It ... Simple Sucker.