Let's have a look now at what can go wrong with the franchise system. The quick answer to that is the same things that can go wrong with an independent business. And let's look at some of those statistics. For independent businesses, the failure rate in the first five to 10 years is at around 80 per cent. But research has shown that for a franchise system, it can be as low as 40 percent. So there are significant advantages in buying a franchise. But things can go wrong, let's have a look at what some of those are.
First thing would be a lack of business skills from the franchisor. Now the franchisee, for the most part is buying into that business based on the assumption that the franchisor has the necessary skills and experience within this particular market to be able to guide them in being successful in their business. So it's important that the franchisor actually has the necessary skills to be able to do that.
The second thing would be an unrealistic expectation, and this could be on the part of the franchisor and the franchisee. So the franchisor overstating or misleading the franchisee what the real opportunity is here for, for income and for revenue. And the franchisee coming in and I guess talking about skills and a background that they don't necessarily possess. So it's really important that both parties do their homework and qualify each other to make sure that this is going to be a successful partnership working moving forward. Because essentially franchising is a partnership.
Inadequate territory. It's so important that a franchisee has a territory big enough to support real growth and profits within their business. There's no point in a franchisor putting multiple franchisees into a territory that can't support it, or opening new franchises before the existing franchisees are really up and running and successful. That can be very detrimental to a franchise business.
Insufficient franchisor support is the next thing. Going into a franchise model, the franchisor needs to have the attitude that they're going to provide the franchisee with the, the support and expertise needed to help them be successful. The quickest thing that can bring a franchise system down is franchisees feeling like they're under supported, like they hardly ever hear from the franchisor. And obviously the first, the first year of that franchise, the franchisee is going to need a lot more support, but that gets less and less as time goes on. But it really does lay the foundation for a strong franchise network when the franchisor is prepared to give the support that the franchisee needs in the, in the early stages.
And the final thing would be a flawed franchise system. That's, that's a big topic on its own. But my advice is always keep it simple. Make sure everybody understands what the rules are, what compliance looks like, what success looks like, and the pathway to those things is very, very clear. And that, that comes down in a big part to the operating manuals, which really do document and layout the, the business model, and it's a reference for the franchisees, which they have from day one right to the end of their franchise.
