The 'real story' on failure rates?

For years, franchisers trumpeted about how franchise businesses enjoyed a greater degree of success than independent businesses.

Some still do, although that contention has been largely disproved.

The International Franchise Association maintains that no reliable data comparing success and failure rates for franchise units versus independents exists. "It would be impossible to do," says a spokesman for the organization. "Given franchising's scope, there are just too many unlike entities to compare."

But Timothy Bates, a professor of economics at Wayne State University, in Detroit, has conducted research he says shows a greater success rate among independents than among franchises. Using Census Bureau data, he found a 62 percent survival rate among franchise businesses after five years, versus a 68 percent rate among independent start-ups.

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