Content area
Full Text
Entrepreneurs within the United States are plagued with high incidences of failure in the early years of business. What seems to be lacking in these organizations is leadership and the type of leadership style that leads to greater levels of success. This quantitative study answered the following research question: Is there a significant relationship between the various degrees of success of selected national franchises and the assessed leadership styles of their leaders? The leadership styles assessed were transformational and transactional. A random sample of 50 franchise leaders throughout the United States was selected and the data was collected from a Multifactor Leadership Questionnaire. The findings showed that there was a significant difference in styles, indicating that transformational leadership delivers greater levels of success at the franchisee level.
Keywords: entrepreneurship, leadership, franchise, success, small business
INTRODUCTION
With small business enterprises being the backbone of the country, it is important to understand the statistics surrounding the success and failure rates of these organizations. It is commonly believed that each year more than one million new businesses are formed in the United States under a variety of structures, and of those, 40% fail within the first year, and 80% fail after five years. Of the 20% that manage to survive the five-year mark, 80% are gone within 10 years (Gerber, 1995). When new entrepreneurs aspire to start an enterprise or company, they have two basic business opportunities to explore. The first is starting out as an independent business person without ties or affiliations to a corporate or regional branch office. The second is to buy into an existing business with already established business practices and procedures. This second choice is known as a franchise system.
Both choices can be equally risky and carry a high probability of failure. However, Stanworth, Purdy, English, and Willems (2001) wrote that the failure rate in independent businesses is not quite as high as the public might surmise. The study noted that, within the first six years, failure rates were at 66% and not the 80% rate commonly cited. In fact, they stated that the figures might be as low as 35% in the construction industry and 47% in the manufacturing industry. Even at these figures, the numbers are staggering. Stanworth et...