Timothy Bates: Firms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups

Attached below is the paper of Professor Timothy Bates, Firms Started As Franchises Have Lower Survival Rates Than Independent Small Business Startups (pdf, 30 pgs). It is provided to Blue MauMau by the U.S. Census Bureau.

The paper was written for the Center for Economic Studies, U.S. Bureau of the Census in May 1994. At the time a research fellow for the Woodrow Wilson International Center for Scholars, Bates used the U.S. Bureau of the Census Characteristics of Business Owners database to study some 20,554 businesses surveyed in 1987. The results of his empirical study had Bates conclude:

Independent business vs. franchisee comparisons reveal that the young firms started without the benefit of a parent franchisor were significantly more profitable than the franchise firms. In short, the franchise route to self-employment is associated with higher business failure rates and lower profits than independent business ownership. (pg. 3)