IFA Makes Dubious Franchise Claims

NuWire Investor:

International Franchise Association (IFA) leadership has a track record for inflating the success rate of franchises, and a recent letter from IFA President Steve Caldeira to the Wall Street Journal claiming a 90% franchise renewal rate among franchisees is no exception. The IFA made a similar claim 20 years ago, although then the number was 95%; however, much like this year, the statistic did not take into account transferences, failed franchise systems and other negative data. The unvarnished truth is that, while there are many franchise success stories, a true accounting will reveal a less rosy picture, including many instances where renewals are a matter of necessity rather than one of free choice. For more on this continue reading the following article from Blue MauMau.

IFA President Steve Caldeira recently wrote a letter to the Wall Street Journal complaining that a recent article about the perils of franchising “ignores that more than 90% of franchisees renew their contracts with their franchisers at the end of their terms.” The obvious claim is that more than 90% of franchisees are successful and happy.

Here we go again!

Twenty years ago, the IFA was claiming a 95% success rate for franchisees, a claim that was thoroughly ‘debunked’ in study after study. It was discovered that the IFA was not counting failed franchise systems, failed businesses where the franchise was transferred (and thus preserved), or franchisees who were simply losing money but hanging on. If a store didn’t close (even though it may have changed hands a dozen times) it was claimed as a success! Read more.

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