Did you know that there are over 750,000 franchises in the US?
Franchising has become one of the most popular business models because it’s low-risk. But, as is with other businesses, there are pitfalls in franchising that can prove costly.
Understanding the most common business franchising mistakes can improve your chances of success. Lucky for you, this article has you covered.
Here are the mistakes to avoid when starting a franchise.
1. Underestimating the Cost of Franchising
Aspiring business owners don’t realize how much it costs to keep up with an already-established brand’s standards. They end up creating small budgets, only to close shop in their initial months of operation.
Don’t go into franchising blind. Research how much it costs to get into your chosen franchise by talking to other franchisees.
In most cases, you’ll have to secure financing from external lenders. It takes time for businesses to realize profits, so shop around for the best financing deals.
2. Trying to Do It All on Your Own
John Donne put it best when he said, “No man is an island.” You can’t thrive in franchising alone since it’s a tricky business.
To improve your odds of succeeding, hire a franchise coach. They’ll help you with everything from preparing your application to understanding franchises.
Or, you can shadow an existing franchisee for some time. They’ll impart skills that’ll help you realize profits in your initial stages of operation.
3. Not Seeking Franchisor Support
The most significant benefit of starting a franchise is getting support from franchisors. But, some business owners don’t take advantage of this opportunity.
Franchisors do more than launch new franchises and promote them. They are also an excellent source of knowledge for success tips.
Remember, most franchisors will be more experienced than you. Seek their guidance whenever you are unsure about anything related to your business.
4. Over Relying on the Franchisor
You’ll need to be careful not to over-rely on your franchisor. Remember, franchisors are only there to offer general support.
Only you know the ins and outs of your business and target market. So you’re better placed to provide tailored solutions to help your business grow.
Also, don’t overlook marketing just because franchisors promote their brands. They undertake marketing on a national level, so they may not target your market. It’s up to you to create a targeted campaign that’ll bring customers in your door.
5. Thinking You Have Full Control of Your Business
Don’t confuse a franchise for a regular business. There’s a price to pay for the visibility and lower risk that comes with franchising.
You’ll have less autonomy in decision-making, processes, and standards. Franchises are like families that pride themselves on uniformity in all aspects.
You have to follow pre-determined branding, marketing, and service provision standards. Failure to do so can lead to financial penalties, or worse, losing your franchise.
6. Inadequate Research
What comes to your mind when you hear franchising? Like many, your mind probably races to McDonald’s or Taco Bell. After all, most of the franchises are food-related.
Many franchising small businesses assume that food franchises are the only opportunities. But, there are more opportunities out there if you’re willing to take a look.
Choose a franchise based on your passion, skills, and access to support. Also, research whether your chosen opportunity has growth potential in your location. Consider other options if the competition is too high.
7. Failing to Hire Experts
You’ll need a legal team on your side before embarking on any opportunity. There’s a lot of paperwork involved in franchising.
You can easily get lost in it all if you don’t have a background in law. And, the consequences can be disastrous as you’ll have to deal with penalties.
Also, don’t forget to hire experts to help develop your business franchising strategy. The best experts will be experienced in the franchise industry you want to join.
8. Poor Employee Training
Employees are a business’s greatest assets, but only when nurtured. You’ll need to invest in employee recruitment and training.
Find personnel who match your business’ vision and franchise’s brand image. Then, nurture them by imparting skills that’ll improve their productivity.
Remember, your employees will interact the most with your customers. So, invest in customer relations training. Otherwise, you may not retain your clients’ loyalty.
9. Taking on Too Much Too Fast
Franchises are among the most lucrative businesses in the world. You’ll likely want to open more franchises after your first one succeeds.
But, moving too fast can stretch you thin and derail your progress. Take time to maximize each franchise’s potential before moving on to the next.
10. Thinking Running a Franchise is Easier than Running a Small Business
Sure, the cards are stacked in your favor if you choose to start a franchise business. You’ll not start from the ground since you’ll be working with an already-popular brand.
But, this doesn’t mean that you don’t need to work hard to be successful. You have to seek funding, find a location, hire a team and find ways to attract customers.
And, you have to do all that while keeping up with your franchisor’s standards. Running a franchise is not easier; it’s just different.
11. Assuming You’ll Always Be Approved
Always remember that franchisors have the right to reject your proposal. Most of them have strict vetting processes and only accept a few applications.
Submit your application with an open mind. If it succeeds, take time to understand what your franchisor requires from you.
If it doesn’t, don’t be afraid to ask why. Knowing why you failed will help you improve on your next application.
And, remember, sometimes rejection is a blessing in disguise. The franchise opportunity may not be ideal for you or your target market. The key is always to keep trying until you find a good fit.
Avoid These Business Franchising Mistakes
These business franchising mistakes may appear daunting. But, the good news is that they’re all avoidable.
All you need to do to understand the franchising market. And always keep an open mind.
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