Get A Survey Of Franchising Issues For Real ... - Daveylaw .com

Investigating a Franchise Opportunity: 6 Key Steps Reach out for general information. Kick things off over the phone or through the company's online contact form if they offer one. ... The franchise disclosure document. ... Evaluate the franchisor. ... Talking to franchisees. ... Meet the franchisor at Discovery Day. ... Make a decision.

Studies in the market have estimated that failure rates for franchises can be as high as 50%, while others studies show lower rates around 20%. With a range like this, It's important you research the potential risks of starting a franchise before deciding to invest.

Operating numerous locations regionally, nationally and/or internationally means that franchise businesses sometimes struggle to maintain brand consistency. Some franchisees may not be delivering the brand promise as consistently as the head office would like, and this may be damaging to the brand overall.

Poor site selection, inadequate working capital and financial resources, and excessive debt service obligations are just a few reasons for subsequent unit failure. But you can't ignore that the franchisor recruited and approved the franchisee into the system.

In addition to more than 400 closures over that period, about 28% of franchisee-owned units have either closed or been sold in just two years. The departures are likely due to a combination of factors, franchisees and other sources say.

Fixed Percentage of the Gross Sales Typically, the franchisee takes home 90% or more of their gross sales, with the remaining 10% going to the franchisor. In this model, the franchisor collects a percentage of total sales, usually between 4-6% of gross sales.

Approximately 5% of franchises fail because survey's show about 95% success rate still in business.