How Successful Are Start-Up Franchisors?
As companies seek ways to expand, franchising is considered a successful business model to implement. Considering that the cost to franchise a business can require a minimum investment of $100,000 it’s important that the new franchise achieves success. It follows that a key question to ask is: How successful are new franchisors?
A significant difference is in the success rate of franchise systems with 10+ company owned locations. One reason could be that the systems with company owned outlets have a better understanding of the business operations and most importantly have the sustained revenues and thus capital to offset slow franchise growth.
For prospective franchisees, investments into new franchise systems without corporate locations can be a higher risk investment. A franchisor needs to be financially healthy and stable to achieve successful growth.
For franchisors and businesses interested in franchising, company owned outlets play an important role in the success of your business. Creating your franchised business requires proper due diligence and a comprehensive feasibility study to ensure proper structure and development strategies are in place.