Mike Filsaime is running a promotion at present using franchising as an analogy. This lead me to research the franchise stats as a 95% success rate is often bandied about – it is of course false to some extent.

Franchise owners often get a small business loan to launch so the stats of failure are easy to find. The true number of franchisees defaulting is around 50% roughly the same as a regular business.

Don’t despair though because some franchises have an outstanding record EG: Subway with a roughly 95% success rate. There are many top franchises with outstanding success rates.

When you take into account that the stats are only for those who have taken out a loan and consider that the vast number of businesses and ventures on or off line often are bootstraps then it becomes clear that yes franchises do succeed more often.

Apart from the seed capital whats the difference ?

1. Marketing and branding

2. Customer Support

3. Mentoring & Training

4. Protected Territory

The franchisees pay a premium for all of this – often many thousands of dollars. But look at whats available to you on line.

What are the top brands online ? Google, Facebook, Twitter, Ebay, Amazon etc just go to alexa.com and browse the top 500 list for all of them.

These top brands offer you a complete franchise – riding upon their success for nothing. There is one catch and that is there is no protected territory.

You get API’s, Affiliate programs, Training and mentoring, The full franchise shebang at zero cost.

This is how these companies succeeded because they know that franchising works. They have essentially franchised them selves to entrepreneurs and developers for free.

So the only problem is that there are not protected territories but as technology is in an expansion phase (when isn’t it ?) you can work around that by channeling into mobile and emerging markets.

Franchising does work – on line its free.

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