Access to Funding Identified as Greatest Hurdle to Franchise Ownership

Respondents say Funding is the Biggest Barrier

Respondents to a February 2020 of aspiring small business owners cited “funding or access to credit” as the biggest barrier to buying a franchise. This level is just below the 68.5% seen in the month-earlier survey.

Franchise buyers recognize that franchise fees account for  a relatively small portion of the capital required to start a new franchise. Over 66% identify “funding or access to credit” as their greatest concern, unchanged from last month’s survey result, and twice the respondents who choose “economic climate.” Franchisors that offer in-house financing or have strategic relationships with lending sources will find themselves at a distinct advantage.

This data was collected February 14-17 from the most recent Small Business Startup Sentiment Index™, days before the onset of the decline in global equities. “Economic climate” was identified as the second biggest hurdle. Search data from Google Trends illustrates that fears related to the Coronavirus surged shortly after the survey.

Coronavirus - Google Trends

JanuaryFebruary
Funding or access to credit68.5%66.7%
Economic climate31.5%24.1%
Other (misc.)10.1%16.1%
Regulatory changes10.1%11.5%
Stock market7.9%11.5%
Political changes9.0%9.2%
Tax law changes12.4%5.7%

Our upcoming monthly survey will offer insights into the impact of the Coronavirus and the tumult in the financial markets on prospective franchise buyers.

The Small Business Startup Sentiment Index™ is based on a monthly survey of individuals who have recently inquired about businesses or franchises for sale on the digital assets of Franchise Ventures. Franchise Ventures is the leading demand generation platform for potential franchisees to thousands of growing franchise systems in the United States and Canada. Its franchise lead-generation businesses include Franchise.com, Franchise Solutions, Franchise Gator, Franchise Opportunities, Franchise For Sale, and BusinessBroker.net, and together they provide the largest collection of prospective franchise inquiries in the U.S.

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Published on Thursday, March 12th, 2020.

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