The first two rows are bogus statistics. See below for an explanation.
This is an ongoing project, a collection of studies and success rates of franchises, independents and small business as a whole. There is a wide range of variation of results.
As you can see from the table, success rates vary greatly by studies. Success rates of independents most likely are as low as 35% (considering 5% and 23% as outliers) versus a low of a 62% success rate for franchises in a 4 year period (throwing out the low of 55% that was assigned specifically to franchise retail outlets).
The most exaggerated success rates for franchising have been overheard from sales persons at a franchise show and are quoted above -- possibly a variation of the incorrect Department of Commerce numbers with a sales twist. (The 5% success rate of independents appears to incorrectly complement the 95% franchise success rate to make 100%. i.e. The bad logic might go like this: If 95% of franchises succeed, then that must leave only 5% for independents to succeed, since both must equal 100%. That's bad math. Both are mutually exclusive and do not need to add up to 100%.)
Part of the problem is in the details of each study. One study defines a small business as anything less than 20 employees while another defines small business as having at least one staff member. There is a problem of comparing apples and oranges. The D & B study measures "small businesses" without breaking down whether they are independent versus franchises as Dr. Bates' study does. Time frames differ as well.
It is safe to say that a franchise's success rate really depends on the franchise system that you buy a franchise in. Some franchise networks succeed better than others while other franchise systems might be worse than independents in their industry.
Notes:
1Department of Commerce success rate numbers are flawed, Entrepreneur Magazine. Study conducted annually between 1971 and 1986 measuring if 5 year old franchises were still in business. The IFA made this declaration:
"Many years ago, the U.S. Department of Commerce conducted studies about franchising which presented such statistics. That information is no longer valid. The agency stopped conducting such studies in 1987. We strongly urge you to remove any information from your Web site and published materials that make such a claim. The use of such data, in the absence of current research, could mislead prospective franchisees who are attempting to conduct responsible investigations."
This statement can be read in its entirety here.
2NFIB is the National Federation of Independent Business Education Foundation. Their estimates are for businesses with employees who close their doors within a five year period. It should be noted that this leaves out the majority of start-up businesses who initially DO NOT employ someone.
3Unable to find original work online but this statistic is quoted on Joshua Sharf's blog at View From a Height. He references Shane, Scott and Spell, Chester, "Factors for New Franchise Success," Sloan Management Review, Spring 1998, pp. 43-50.
4There is another set of data released by the SBA that has a 39.5% success rate at six years of start-up businesses with employees. (See Survival Rate After Startup Source: SBA, "Small Business by the Numbers," May 2002)
Other readings:
Franchise, Go It Alone, Or Keep My Lousy Job?
What's Behind High Small-Biz Failure Rates?
Interview with Peter Birkeland, Author of Franchising Dreams
franchipedia
articles
blog
podcasts
newswires 
forums
calendar
tools
