T. Bates, ANALYSIS OF SURVIVAL RATES AMONG FRANCHISE AND INDEPENDENT SMALL BUSINESS STARTUPS, Journal of small business management, 33(2), 1995, pp. 26-36
Analysis of small firm formations over the 1984-1987 period reveals th
at franchise startups exhibit both higher rates of firm discontinuance
and lower mean profitability than cohort independent business startup
s. The young franchising firms are heavily concentrated in retailing,
and it is the retail franchises that most often fit the high risk, low
return profile. Popular franchising niches in retailing appear to be
saturated, leaving diminished prospects for newcomers.