When starting a franchise, you want to feel confident that it’ll work out. Though there’s no guarantee, franchising comes with far fewer risks than starting your own business from scratch. Still, certain pitfalls might prevent franchisees from finding success. Here’s how you can avoid them.
Whether it’s a lack of research or a lack of hard work once you’re on the job, there are definitely ways to fail as a franchisee. Though you’re taking fewer risks and you’ll have access to expert support, you’ll still need to be proactive in terms of accepting help when it’s offered and speaking up when you’re struggling. In this article, you’ll discover the five most common pitfalls that limit franchisee success.
Five pitfalls that can stand in the way of franchisee success
1. Failure to research
When starting your franchise journey, it’s absolutely crucial that you research extensively and do your due diligence. Start with Google, then turn to expert sources like the British Franchise Association. Then chat with your potential franchisor, and with current franchisees at the company. Consider consulting a legal professional regarding the contents of your franchise agreement. When you gather together all the information you need, you’re able to make a truly informed decision that sets you up for the future.
If you end up investing in a franchise with a terrible reputation because you failed to look into them, you’ll only suffer financially and professionally as a result. It’s like agreeing to marry someone on the first date. It might work out perfectly. Or you might realise, when it’s already too late, that they chew with their mouth open and are rude to your server.
Franchise ownership is a life-changing endeavor, so candidates want to make sure they are doing their homework and soul searching to ensure they choose the right franchise for them and their families.
—Jim Judy, Entrepreneur
2. Failure to put in the hard work
Franchising comes with a lot of rewards, but it also requires a lot of hard work. The amount of work required will depend on the franchise, and the type of opportunity, but nevertheless, it’s certainly not some “get rich quick” scheme in which you become a millionaire without lifting a finger.
Yes, franchising can sometimes become a passive source of income, but nothing is guaranteed, and this will only happen following years of effort and work, anyway. Every business endeavour must be nurtured, especially in the first few years, and franchising is no different.
>> Read more:
3. Hiring the wrong team of people
For many franchisees, the next important step to take after signing that agreement will be hiring a team of employees. The right team could make a franchise, and the wrong team could break a franchise, which makes recruiting good employees extremely important. In order to do this, ensure that you:
- Create a concise but comprehensive job description
- Prepare well ahead of time for interviews
- Always try to meet candidates in person to get an accurate feel for who they are
- Seek advice from your franchisor
If you don’t take the time to perfect your recruitment process, you’re only likely to have to spend money and time replacing poorly performing staff members down the line. Also, a single sub-standard, non-committed member of staff could do some irreversible damage to the reputation of the entire brand, not just your franchise unit, by providing poor customer service. 95% of workers agree that a bad hire affects team morale [Robert Half International].
4. Investing more than you can afford
Franchising is a costly process, though the size of the investment you’re required to make will depend on several factors, including the popularity, location, sector and size of the business you’re looking to franchise with. On average, the cost of setting up a franchise unit in the UK is £42,200 [British Franchise Association]. The costs associated with franchising go beyond this initial investment, however, and failing to account for this can cause problems for both franchisee and franchisor.
If you want to avoid bankrupting yourself with a franchise investment, you’ll need to fully understand all the associated costs, such as the franchise fee, the inventory fees, the possible monthly fees, and the working capital you’ll need to have spare. Though fewer than 1% of franchise units close each year citing commercial failure [British Franchise Association], it’s still important to be careful and considered before you throw money at an opportunity.
5. Failure to handle the stresses of business ownership
Running your own business is an exciting, flexible role, and for some, it’s perfectly suited. If you’d love to be your own boss without all the risks of building a new business, and you’re prepared to deal with the demands involved, you’d probably be a very good franchisee. Some, however, will misunderstand how much time and effort they’ll have to commit, and will end up bowing under the pressures, stresses and uncertainties of business ownership.
In 2019-2020, there were 828,000 cases of work-related stress, depression or anxiety in the UK [Health and Safety Executive]. To avoid letting stress take over your headspace and sabotage your business, you should find stress management techniques that work for you, such as boundary setting, delegating and practicing mindfulness. If you’re unable to prioritise your wellbeing, you’ll risk your franchise beginning to stagnate and underperform. Communicate, and check in with your employees, too.
We need to find a way to normalise discussing when we have bad days, and being honest about our stress, our burnout, our anxiety, our depression – whatever the emotion is, it’s human – and it’s human to care for someone else’s current situation.
—Dan Murray-Serter, Forbes
>> Read more:
- 5 Tips for Developing Your Employees into Future Franchisees
- Being a Successful Franchisee Means Adopting an Entrepreneur Mindset
- 7 Common Habits of Successful Franchisees
- Mythbusters: Common Misconceptions About What Makes a Successful Franchisee
- Five Tips for Boosting Your Self-Confidence as a Business Owner
- Traits of an entrepreneur
Guarantee your own success as a franchisee by working hard and seizing opportunities
If you can step cleanly over the pitfalls and navigate the road to success, you’ll be a profitable franchise unit in no time at all. And now, you should know exactly how to do that. Next up, find out how to set realistic expectations for franchise success, or discover the state of franchising in a post-COVID world.
Cara Squires, Point Franchise ©
0 Comments