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How does the failure rate of new franchises compare to independent start-ups?

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How does the failure rate of new franchises compare to independent start-ups?

Author: Vicky Wilkes

answered by Vicky Wilkes

Senior Associate at Squire Patton Boggs (UK) LLP

Most sources suggest the success rates of franchises are greater than those of independent start-ups. However, failure rates can be misleading and difficult to measure, in part because the two business types are very different.

A franchisee has the advantage of starting with a successful brand and business model and is carefully screened by franchisors before they’re appointed. In contrast, a start-up will usually take much longer to develop and the barriers to entry are far lower.

However, if you’re making a choice between opening a franchise and an independent start-up, perhaps the most important factor is whether the business is right for you and suits your personal goals.

Franchises are often ideal for those who have previous business experience and enjoy working as part of a corporate structure, whereas startups tend to favour those who prefer to operate independently and have more control over their business.

Vicky Wilkes is a senior associate at law firm Squire Patton Boggs (UK) LLP, specialising in both domestic and international franchising.

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