Fishy Franchise Facts on the Web

There is a source of bogus franchise facts on the Web that is amusing to behold for those of us who observe the franchise world. The web page gathers a few widely circulated "franchise facts," without citing sources:

• 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
• Up to 6,000 franchise companies [note: author must mean franchisors] operate in the U.S.
• Franchise businesses account for nearly 50 % of all retail sales in the United States

In contrast, these incredibly impressive figures posted on the same site have very authoritative citations:

• A 1999 study by the United States Chamber of Commerce found that 86 % of franchises opened within the last five years were still under the same ownership and 97% of them were still open for business.
• According to Department of Commerce figures, after seven years 91 % of new franchises are still in business, as compared to only 20 % of individual new start-up businesses.

Data like these reassure buyers that the franchise concept before them, because it is a franchise, is one of the safer investments out there. Sellers of franchises also want to believe these outstanding numbers because it makes their job easier.

Question #1: Am I picking on someone needlessly today, or are these numbers genuinely bad?

Question #2: Got any other fishy franchise figures you have encountered on the Web? Post them here to have the community discuss them.

Related Reading:

• IFA asks members not to quote old Dep't of Commerce numbers that 90% of franchises succeed
• Blue MauMau's franchise by failure rate, individual franchise brands ranked by their franchisees' inability to pay back their SBA-backed loans
• Franchipedia: Franchise Success Rates
• Small Business Administration declares SBA-backed loans to franchisees are at a higher risk of failure than those given to small business owners
• Franchises Have Higher SBA Loan Failure Rates than the average small business by Frandata
• Startup Failure Rates, the REAL Numbers. Entrepreneur professor, author and venture capitalist Scott Shane says failure rates for startups aren't as bad as you probably thought, 71 percent of small businesses will shutter their doors within ten years.
• How much does the typical franchisee make? Combining a franchised company's annual net income and the owner's salary will net the average franchisee $60,000 altogether in good times and half of that during this recession, according to franchise expert, author and publisher (Source Book Publications) Robert Bond
• Myths in Franchising by professor, author and consultant Peter Birkeland
• The Elusive Earnings Claim
• Public discussion forum on Earnings Claims