Many Americans dream of owning their own business and being in control of their destiny. The only issue is that very few folks will actually dive in and take the risk to become their own boss. The reason for this holdback: it’s the fear of failing.

The rate of failures on startup businesses varies from person to person. However, Scott Shane of Case Western Reserve University often has his data cited. He states that failure rates in one year are about 25 percent and 10-year failure is about 71 percent. What do these numbers mean? If four businesses begin in one year, one business is bound to fail in that first year. 71 percent of businesses currently open will be shut down in 10 years.

Understanding Entrepreneurship In Franchising

Since failure rates are high, it’s of no surprise that very few people will try their hand at it. Many people don’t know that a way to become a business owner is to start a franchise. Franchises have less of a chance of failing and are actually do well monetarily. Using the same 10-year study from above, nearly 62 percent of franchises are still in business, an extremely high figure.

Why Franchises Stay In Business

Why is it that franchises stay in businesses longer than a startup company? Franchises have a large quantity of advantages that novice entrepreneurs don’t have, which means the venture is less risky.

Five Advantages of Franchises

Advantage 1 – Training and Support

Franchise businesses will give new franchise owners plenty of training and support in the beginning. Franchisers get a fraction of the profits so it’s in the best interest to ensure that the spin-off franchises do well. Smaller franchises offer people consequential support.

Advantage 2 – Purchase Company Model, Not Just Name

The big reason franchises tend to last and thrive is that the business model is already working. It’s not just about the name or the brand; it’s the model itself that helps to make this franchise successful.

Advantage 3 – Bargaining Power

When you have a franchise, you have some bargaining power with your suppliers. Independent, new business owners don’t have this kind of power or luxury and must earn it, unlike a franchise.

Advantage 4 – Expert Support

When you get involved with a franchise, your business is not alone. If you ever have problems or questions then you seek out some advice. Whatever business franchise you go into, you’re bound to have hundreds of people you can turn to that would love to give you advice so that you succeed. Many larger franchises will also give individual training and support.

Advantage 5 – Well Capitalized

Most franchises are well capitalized, which makes them have a high survival rate. Most startup businesses don’t have this luxury. People who want to get involved with franchises usually have just enough requirements to buy into the business.

Five Disadvantages of Franchises

The disadvantages of franchises are pretty clear-cut. Make sure to understand them before you decide to that the franchise business is right for you.

Disadvantage 1- Loss/Lack Of Control

Independent franchises often have to follow the guidelines set forth by the franchise including what kinds of tables to use, wallpapers and more. If you don’t want to give up that control, this won’t be the business for you.

Disadvantage 2 – Less Long-Term Profits

Franchises are a big business but making it rich isn’t always there. You’ll earn a decent income but nothing like Microsoft or any other Fortune 500 company.

Disadvantage 3 – Hard To Sell

When you have a franchise, it’s harder to get out from underneath it especially if it seems the parent company is having problems.

Disadvantage 4 – Possibility Of Parent Company Going Out Of Business

It doesn’t matter if your business is doing good or not; if the parent company goes under, so will you. Make sure you choose a company that’s been doing well, both in good times and in bad.

Disadvantage 5 – Possibility Of Getting A Bad Name

When a franchise fails to do well, you could be indirectly affected by it. Your reputation will be tarnished just because of the name.

Doing business with a franchise is a good way. Franchises bring lots of chance for success, even more than opening your own business from the ground up. Also it is the doorway for you being the boss and making the decisions. This is a main reason why people want to start a franchise. However, choosing a great franchise is not easy. If you are unsure of what franchise to choose, here are a few steps to lead you to the right directions.

First of all choose a franchise business that you are interested in. No matter what you need to be doing something that you enjoy otherwise you will defeat the purpose of working for yourself and enjoying what you do. Also you will decrease your own chances of success. You will have a better chance at being successful in a franchise that is interesting to you. If you need to make a list of interests you have.

Next you need to choose something that you are knowledgeable about at least somewhat. You will really hurt your chances of success if you jump into a franchise that you know nothing about. So take your list of interests and mark out the ones that you don’t know enough about. For example I am interested in animals but I don’t know enough about them to start a business about them.

Then you need to find franchises that are available that fit into what you are interested in and what you know about. There are many sites online that show many franchises and a little bit about them. Once you find some franchises that you think may work for you, you move to the next step.

You must fully research and inquire a lot about each one individually. Each franchise is different and will present different pros and cons. You will need to evaluate each one and see how they fit for you. What you want is not what others want. Make sure you find a franchise that offers a great package for you. A good franchise already has a great operating system in place. Also you will be spending your money to invest in this make sure you are choosing a franchise that will guide you through the process. That is a key reason why franchises are so successful. They already have a system that work and they train you how to be successful like they are.

However, if you are looking for more challenge and to be a part of the beginning of a great franchise you may want to find a new franchise. There are many businesses that are just getting into the franchise aspect that you could become part of and really use your knowledge to not only be successful yourself but become a leader for future franchisees.

You can find more guides to franchise choice from other resources, but the steps above are the most basic and you can follow them to get a great franchise. Just make sure when you find a great franchise and then invest your time and money in!