Why the Ups and Downs of Franchising Can Feel Like a Rollercoaster Ride

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Rollercoaster ride of franchising

What’s it like to run a franchise business? It’s the question on most prospective investors’ lips. The truth is, it’s likely to be a bit of a rollercoaster ride - at least in the first few months. Make sure you’re prepared for what’s to come with our guide to the ups and downs of franchising. 


Every business owner dreams of a problem-free launch and a quick journey to profitability. Sadly, although franchising provides an element of security, your transition into the industry may not necessarily be a smooth ride. Like all businesses, franchise units require a lot of hard work and dedication to become successful, not to mention a fair bit of money. 

Of course, the end result is almost always worth the initial struggle, and by understanding the rollercoaster-esque nature of the set-up process, you can anticipate and prepare for potential setbacks.

What are the ups and downs of franchising? 

1. Going up

Picture the scene: you’ve selected your ideal investment opportunity, secured a business loan and signed a franchise agreement with your franchisor. This is an exciting moment; you’re about to take control of your career, build up a business and become a capable entrepreneur. 

Plus, you’ve established a good relationship with your franchisor and you’re certain they’re dedicated to supporting you as you develop your franchise unit

Ultimately, you feel secure within the franchise and are comfortable you’ve made the right choice about your route to business ownership. You’re optimistic about the future and the opportunities on offer with the brand. 

2. Going back down

Once the adrenaline of launching the business has worn off, you’ll be left building up the unit until it reaches its break-even point and starts to turn a profit. There will be times when you work long hours and doubt you’ll ever see success but staying positive will give you the motivation to reach your goals. 

At this point, you may also be starting to feel the strain of your ongoing fee requirements and loan repayment obligations. You may start to resent the costs associated with the franchise model and wonder what you’re getting in return for the money you’re giving away.

This is a very natural reaction when your franchise unit starts to become more established. Your confidence will grow and the support you previously relied on seems to become less of a necessity.

Becoming accustomed to what being a franchisee entails was challenging at first because you take on numerous roles and responsibilities… For example, becoming an accountant, trying to employ people, you’re out all hours and then doing the back office at the end of the day. The first three months were particularly difficult as you’re trying to get the ball rolling…
—Metro Plumb Kent franchisee



3. Twisting

As soon as your franchise unit starts to turn a profit, your mindset will probably change. You’ll no longer be in the red and you’ll be able to see how your hard work and investments have paid off. 

In other words, you’ve reached the light at the end of the tunnel and you can start to think about how you’ll build on your current success. After weeks, months or even years of diligence, you’re finally being rewarded for your efforts and you’ll probably find renewed optimism, motivation and passion for your work. 

As you enjoy the extra revenue your franchise unit is bringing in, you can find your rhythm and start to settle comfortably into a routine. You’ll find the strategies and practices that work best for you and incorporate them into your ongoing operations. 



4. Turning 

Unfortunately, you can’t continue developing your franchise unit without considering your targets or performance statistics. Your franchisor may expect you to reach specific goals, and you risk being in breach of your franchise agreement if you fail to achieve them within a certain time period. 

If you feel your franchisor’s expectations are unrealistic, or you’re frustrated with the comparatively poor performance of your unit, you might blame the issue on a lack of support. Some franchisees feel their franchisor could do more for them as they build up to their targets. 

When you edge closer to your business’s milestones - the six-month, 12-month or 18-month anniversaries, for example - your emotions are bound to be all over the place. You’re dedicating time and effort into making your business profitable, while your franchisor takes fees and applies restrictions in return. 

At this time, try to think rationally and remember why you initially invested in the franchise. The franchisor’s contribution may not always be obvious, but you wouldn’t have launched your business without them. If you really feel they could do more for you, try discussing your problem with them; it’s in their interests to help you succeed.

 

5. Slowing down

You’ve managed to survive the difficult first stage of launching and running a franchise business. As your unit becomes more established, you can take the time to reflect on your journey so far and review your performance. 

By this point, you’ll have a better appreciation of the franchise system and feel comfortable with the franchisor and the level of support they provide. You’ll have also learnt how best to adhere to the business model in order to see the benefits. 

As time goes on, you will work with the franchisor to develop and improve your business and continue making a valuable contribution to the franchise. From here, you’ll have the chance to move onto bigger and better things, taking on new challenges and making the most of different opportunities within your unit. 

Navigating the ups and downs of franchising

Franchising can help savvy entrepreneurs take a shortcut to business ownership, but the system comes with its own unique complications. Every franchisee is likely to experience highs and lows as they develop their unit. 

Although setbacks can feel monumental when you’re experiencing them, most are only a small obstacle in an otherwise productive and profitable journey. For this reason, 90 percent of franchisees are happy with their franchisor, and more than half of units declare an average annual revenue of more than £250,000. Plus, the number of people working in the franchise industry has grown by more than 70 percent in the past decade (Boost Education). 

You can find more guidance on anticipating and preparing for the ups and downs of franchising with our informative business articles. Browse our recent publications or use the search box to find relevant content.

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