Carpet cleaning franchises or any other franchises to own. Are they are good thing or not?
Timothy Bates from Wayne State Uninversity conducted a study of survival patterns of franchised vs. independent businesses commissioned by SBA. He found that among businesses started in 1986 and 1987, about 62% of the franchises and 68% of independent firms survived until 1991. Independent businesses were more profitable; franchises, on average, were losing money. Among franchises, large incorporated multi-unit franchises in restaurant and hotel industries were the most profitable (meaning that single-unit franchises and franchises outside restaurant and hotel industries did even worse than average). He also found that franchises purchased from a previous owner were riskier than those started from scratch. Additionally, Scott Shane from Georgia Institute of Technology found (also in a study commissioned by SBA) that 75% of franchisers (i.e., companies that sell franchises) fail within 10-12 years. Those that survive longer tend to have lean headquarters and low levels of field support,
