6 Questions To Ask Yourself if Your Franchise Is Failing

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Why things don't go as planned

Owning a franchise is a dream for many entrepreneurs; you can take pride in running a business while relying on expert guidance. But what if it all goes wrong? By carefully and objectively evaluating the causes of your franchise failure, you can put yourself in a strong position to succeed. 


It’s a sad fact, but more than half of new businesses close within their first year. And while franchising offers a layer of safety, with the chance to use a tried and tested model, investors aren’t immune to franchise failure. 

Unfortunately, the poor performance of one unit can have a devastating impact, not only on the franchisee, but on the entire franchise network as a whole. If customers have a substandard experience at one business branch, they’re likely to associate the whole brand with the same underwhelming service. 

Questions to ask yourself when facing franchise failure

There are many ways you can boost your chances of success, but reviewing the situation thoroughly and exploring various avenues will help you turn your fortunes around if you can. Here are six questions you should ask yourself if your franchise unit is suffering. You can find more guidance on the suggestions by clicking the links provided.

1. Do I have enough capital to maintain my business?

A lack of funds is probably the most common cause of franchise failure. It’s easy to underestimate the cost of setting up and, more importantly, maintaining a business, which can lead you very quickly into dangerous territory. 

Before you go into a franchise agreement, always make sure you have a contingency fund in case things don’t go to plan. You never know when you’ll need a little extra capital to keep everything ticking over nicely. Anticipated cash flows give you a rough idea of the returns you can expect, but don’t rely on them when you launch and grow your unit. 

2. Have I chosen the right location(s)?

If you operate from a commercial property, the success of your business is likely to be impacted by the number of people passing by and its accessibility. Perhaps your product or service isn’t in demand locally, or maybe you can’t attract people from further away because you don’t benefit from a car park or transport links. 

If you invest in a property you later discover is inadequate, and cannot move to a new spot, it could be worth exploring additional revenue streams. By launching an e-commerce site, offering services online or even diversifying your product range within the limits of your contract, you could boost your profits.

3. Am I delivering a customer-focused service?

According to research, 42 percent of people are put off by rude or unhelpful customer service staff (NewVoiceMedia). And those who had a positive experience with a business are willing to spend 140 percent more than those who didn’t (Harvard Business Review). So, it’s worth concentrating on delivering a service customers value. 

Take some time to reflect on the experience you’re providing to those who use your business and try to deepen your understanding of the model your franchisor wants you to adopt. There may be ways you can improve your standard of customer care, and sometimes it’s as simple as forming a personal connection with the people you meet. 



4. Am I recruiting staff effectively?

To maximise your franchise unit’s efficiency, you need to recruit the right employees first time. Hiring unsuitable candidates could damage your productivity and profitability, as you’ll need to spend a significant amount of time and money onboarding and offboarding staff members. In fact, the average cost per hire in the UK is £3,000 (SHRM). 

If you think your business might be negatively affected by poor recruitment choices, it’s worth considering the qualities you should be looking for in your job applicants. Are there any extra skills or attributes your business could benefit from? Then, try to streamline your recruitment process to make sure you’re taking all the right steps to find perfect employees. 



5. Am I lacking knowledge or experience in any areas?

It can be a tough admission to make, but sometimes failure is simply down to personal inexperience. If this is your first time in a managerial role, it can take time to get to grips with all the different business concepts and processes. Even if you’re a seasoned investor, you may need a while to learn about the specific requirements of the business or industry. 

Franchising involves a fair amount of learning on the job, and there’s no shame in feeling as though you’re coming unstuck. Turn to your franchisor for extra support; they may be able to offer professional development courses to help you boost your skills. 

Also, networking with other franchisees and businesspeople can help you improve your know-how. Alternatively, you could read up on your chosen subject or attend training classes in your free time. 

6. Is my franchisor providing enough support? 

Sometimes, franchise units fail because the franchisee doesn’t receive the amount of business support they need. Of course, franchisors aren’t there to hold your hand at every moment, but they should offer some help as you establish your outlet and overcome any obstacles as you develop it. 

Whether the franchisor offers intensive training and online support, or takes a more hands -on approach with regular on-site mentoring throughout the year, make sure you’re getting your money’s worth. If not, don’t be afraid to raise the issue with them in your next meeting. 

Find more information on running a franchise unit

At Point Franchise, we know running your own business doesn’t always go to plan; from social media blunders to deep-rooted cash flow issues, every franchisee suffers setbacks in some form. However, the industry is well prepared to support investors and build them back up when obstacles arise. 

Your franchisor should be able to offer useful guidance and reassurance if you’re struggling to keep the numbers heading in the right direction. You can also find further information and suggestions in our daily articles. Take a look at our feature on the most common causes of franchise failure to find out more about this topic, or use the search box to find other informative guides. 

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