Starting a franchise business can be risky, and takes courage and a certain know-how. But along with those risks come some unique benefits, such as the support of an established franchisor.<\/p>\n
Does that mean starting a franchise business is easy? No, and that\u2019s why you need to know the mistakes so you can avoid them when starting a franchise. In this article, we take a look at some of the pitfalls and snares that could trip you up when you take on a franchise for the first time.<\/p>\n
What makes starting a franchise business different from an independent business? A franchise is a licensed business or brand. Franchisors sell franchises and those taking on the license become the franchisee. This is the real difference between the franchised business and the independent business. The franchise also comes with a proven business model. On top of that, you get ongoing contact and backup from the franchisor. You\u2019re part of a larger brand, though you take on the responsibility of the day-to-day running of your business and some of the profit.<\/p>\n
While there is that extra support to the hand, mistakes can always happen. We take a look at 20 things you need to avoid when starting a franchise.<\/p>\n
You flung open your doors and all was going well for the first few months but you seem to have run out of steam. Why? Could you have fallen out of touch with your franchisor? You may have lost sight of that business strategy and not implemented it effectively. It\u2019s time to engage with your original vision. It\u2019s time to start making decisions that are going to put you back on track with your customer base and your business plan.<\/p>\n
When first starting a franchise business, it\u2019s easy to overlook the total cost of running a franchise. It\u2019s even easier to find yourself in financial trouble. If you\u2019re starting your business with financing from your bank, start your research early so you can figure out all the terms. Knowing where you stand is going to go a long way. Some banks will need a larger down payment than others. Do your research and find out who\u2019s going to offer you the best rates.<\/p>\n
If you were looking for a new car, would you buy the first one you saw in the showroom? Of course not, you\u2019d do your research. You\u2019d figure out what fits into your budget and what extras you were looking for. The same is true when\u00a0choosing a franchise<\/a>.<\/p>\n You need to shop around. Maybe the first franchise doesn\u2019t match your skills. Do you have the finances to take on the bigger brand? How does one franchise compare to another? Look around and see what\u2019s on offer before you take the next step. Choose carefully, it\u2019s a lot to take on.<\/p>\n While we\u2019ve talked about accepting help from the franchisor, it\u2019s important to remember that this is your business. For the most part, you\u2019re calling the shots. You\u2019re doing the hiring and firing and following the business plan that you put together. The franchisor will be keen to get involved with some aspects such as advertising but the day-to-day running of your business falls to you. It\u2019s you who will be shouldering the responsibilities.<\/p>\n On top of this, you will find that much of the business support available will be available as a template. This happens so the franchisor can roll out generic support to a wide group of franchises. Individual support for your business may not arrive in a way that answers your specific needs.<\/p>\n The very real benefit of starting a franchise business and owning a franchise is that your customer knows exactly what it is they\u2019re getting when they set foot inside your business. Take McDonald\u2019s, wherever you are in the world, a Big Mac is a Big Mac. You assure the customer that they know what they\u2019re spending their money on and will understand every aspect of their experience.<\/p>\n If you find yourself drifting away from that original offer, for whatever reason, you\u2019re going to feel the hit. Your customer base chooses your franchise precisely because they know what they\u2019re buying. They\u2019re not looking for new content, or if they are it\u2019s within the strict limits of your brand guidelines.<\/p>\n You may have a lot of experience and a strong business background. This doesn\u2019t necessarily translate to success in the world of the franchise. At times, it can feel very isolating, especially when you find yourself going through a slump.<\/p>\n One mistake you should avoid when starting a franchise business is cutting yourself off from other franchisees in your area. Get to know them. Meet up and talk about business, bounce ideas off of each other and share your experiences. They may be a competitor in some small way but having people on your side who know the challenges you face is well worth having.<\/p>\n Sounds strange, but it happens all too often. The franchise you bought was the right fit for your locality and your business plan. Now you\u2019re struggling under the weight of your own success.<\/p>\n When you take on your franchise, think about how you\u2019re going to prepare for growth. By growth we mean taking on extra staff, making some changes to the way you process orders, starting customer engagement and so on. Have your plans in place and success won\u2019t take you by surprise, you\u2019ll be ready and waiting for it.<\/p>\n In the same way, you\u2019re not prepared for success, there is a high chance you\u2019re not prepared for the other challenges and holes that you might fall into. From an unstable political environment to a downturn in the financial health of your country. Like any business, your franchise needs to be ready to trade in any climate.<\/p>\n How will you persuade customers to spend their money with you when they\u2019re watching every dollar? Sure, the franchisor might hit the advertising hard, but the individual success of your branch is down to you. Have plans in place and get ready to ride the bumpy waves of business.<\/p>\n You\u2019ve heard it said on many\u00a0business forums<\/a>\u00a0and that\u2019s because it\u2019s true that your staff are your greatest asset. They run the business on the ground. They are also the brand ambassadors of your franchise and carry that with them as they finish work for the day. Training up your middle-management team is an important piece in the franchise jigsaw.<\/p>\n The best thing you can do is to lead by example. Show your managers how to get the best out of staff to achieve growth and maximize profit. Show how you interact with all elements of the business and lead them in the way you want your management team to go. You will find that delivering staff training will also remind you of the basic principles of running your franchise.<\/p>\n Statistics show that the average franchise agreement lasts between five and ten years. If you haven\u2019t done so already, write down your own personal career goal for both of these terms. If, after five years, everything is going along as you expect, then you may want to renew your commitment to the franchise. If being a franchise owner<\/a> is not shaping up quite as you expected, you\u2019ll need to decide whether to stay or to go.<\/p>\n At that point, it\u2019s crucial to have an exit strategy primed and ready to go. Terminating your contract early is likely to lead to financial penalties. It makes sense to have a pot of money set aside to cover that expense. This helps you exit before you encounter any more financial loss.<\/p>\n When starting a franchise business, there\u2019s paperwork and there\u2019s due diligence to go through before you\u2019re the proud owner. If you think you can go it alone, checking off all the legal requirements, you\u2019re either a lawyer or you\u2019re trying to cut costs.<\/p>\n The simple answer is don\u2019t cut corners. Legal requirements for franchisees vary from franchise to franchise. You will need a lawyer with the right knowledge and experience to protect your interests as you go through the process.<\/p>\n Running a franchise carries different and even lower risks than setting up your own business. Yet, you need to remember that your business is part of a bigger family. It\u2019s a mistake to think that you have overall control of the direction of your business in areas such as decor, special offers and so on. It\u2019s tempting to go \u201coff script\u201d, but in reality, you may find yourself in breach of your trading agreements and that in turn may lead to a financial penalty.<\/p>\n Your customers are likely part of your wider community. They are the people who develop brand loyalty for you. They are the people who return again and again to your franchise and they are the people you\u2019re marketing your franchise to.<\/p>\n That\u2019s why getting involved in community initiatives can be great for your marketing. It is also a novel way to engage with your customers on a more personal level. Talk to your franchisor about\u00a0Corporate Social Responsibility<\/a>\u00a0(CSR) projects. Find out how they might benefit your franchise.<\/p>\n It\u2019s easy to rely on your franchisor to take the helm when it comes to advertising on a national level. As a franchisee, it\u2019s up to you to support these marketing efforts by getting on board with the various campaigns and executing them to their fullest.<\/p>\n It\u2019s not every business that gets access to so much marketing support. If you want your franchise to achieve great things, then don\u2019t lose momentum when it comes to your marketing activities.<\/p>\n The franchise you\u2019re going for might just be a brand that you have a strong affinity with. Perhaps it\u2019s a restaurant that you have fond memories of as a child, or maybe a gym franchise that plays into your love of fitness. It\u2019s all too easy to get swept along by nostalgia or your own personal interests. Instead, you should be looking at the business model and checking out how viable it is.<\/p>\n Try and put aside your passions and view the franchise simply as a business opportunity, with all the pros and cons that come along with it. Just because you want something to be yours, don\u2019t push through the deal without first carrying out your due diligence.<\/p>\n Your whole personality and the way you approach your franchise shows that you do or don\u2019t have the right temperament to take on a franchise. You\u2019re also surprised to find that running a franchise is\u00a0no less risky<\/a>\u00a0that starting your own business, just in a different way.<\/p>\n Don\u2019t make the mistake of confusing the two. You\u2019re one or the other, so follow your heart and your skill set when it comes to making the right choice.<\/p>\n4. Relied Too Heavily on The Franchisor<\/h2>\n
5. You Didn\u2019t Meet Your Customers\u2019 Expectations<\/h2>\n
6. Flying Solo<\/h2>\n
7. You Were Unprepared for Success<\/h2>\n
8. Flying by the Seat of Your Pants<\/h2>\n
9. You Neglected Your Staff Training<\/h2>\n
10. Not Knowing When to Quit<\/h2>\n
11. Failed To Get The Right Legal Advice<\/h2>\n
12. Thought You Had Autonomy<\/h2>\n
13. Not Getting Involved With the Community<\/h2>\n
14. Lost Your Way With Marketing<\/h2>\n
15. Got Lost in the Idea<\/h2>\n
16. You Thought a Franchise Was Going to be Easier Than a Small Business<\/h2>\n
17. You Might Not Get The Gig<\/h2>\n