Franchises Preferred Over Startups from Scratch or Legacy Businesses For Sale
By: Michael Alston for Franchise Insights
September 10, 2024 – Individuals interested in business ownership preferred the option to “buy a franchise” over acquiring an existing business by a significant margin in the August business buyer survey. While almost 60% indicated interest in the franchise purchase option, only 42.3% were interested in buying an existing business for sale.
Starting up a (non-franchise) business from scratch is under consideration by 43.3% of respondents, slightly more than the “purchase existing business” option. The totals add up to more than 100% since survey participants could choose more than one option if they are considering more than one.
In the same August survey, almost 63% agree that “now is a good time to start a business,” and with optimism about conditions ahead. Further, 93.3% of respondents see conditions for business and franchise startups “the same or better in three months”, the highest reading since September 2021.
While reasons for these preferences were not collected in the survey, the benefits and support of a network of successful franchise owners and recognized brands are well-documented, with more than 806,000 franchise units in the US according to the International Franchise Association. Startups of entirely new businesses fail for a myriad of reasons – poor business plan or product, insufficient capital, poor location, competition, or failures in execution. Purchases of existing businesses can require an order of magnitude more capital up front with many of the same risks and no network of training and support that is typically available to franchisees.
Even with the Federal Reserve poised to lower interest rates, access to funding remains a primary concern of aspiring business owners. More entrepreneurs plan to use personal financial resources than a year ago, likely related to the cost and availability of loans versus the appreciation of home values and financial assets.
This survey of aspiring business owners was conducted in August 2024 for the most recent Small Business Startup Sentiment Index™, which is conducted monthly by FranchiseInsights.com on individuals in the U.S. inquiring across the FranchiseVentures lead generation platform. It should be noted that survey respondents visiting these franchise directory websites may have an awareness of franchises that may not be representative of aspiring businesses owners as a whole.
FranchiseVentures is the leading franchise lead-generation platform for potential franchisees to thousands of growing franchise systems in the United States and Canada. Its franchise lead generation brands include Franchise.com, Franchise Solutions, Franchise Gator, Franchise Opportunities, Franchise For Sale, SmallBusinessStartup.com and BusinessBroker.net, and together they provide the largest aggregation of prospective franchise buyers in the U.S.
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Published on Tuesday, September 10th, 2024.