Franchising is a great alternative for entrepreneurs to building a business from scratch. It’s often considered a safe option because it’s part of a well-established brand with an existing customer base.
However, that doesn’t mean it’s 100% secure. There’s still plenty that can go wrong if you’re not careful.
You may think that a top franchise like Subway has perfected the franchisee model. However, this report from Business Insider shows that there have been many disgruntled franchisees. If even the big names can get it wrong, then it’s definitely worth being cautious.
So we’ve put together a list of the most common blunders that you can avoid when setting up a franchise.
Don’t look for the minimal investment
As the old saying goes, you get what you pay for. Larger franchise investments tend to increase your chances of greater returns so it’s better to avoid the cheapest options. The cheap franchising options may find you missing out on support and mentorship which isn’t ideal as it’s one of the pros of opening a franchise in the first place.
Relying on your instincts
There will be a lot of people out there, successful entrepreneurs included, who will tell you to trust your gut and listen to your instincts.
While your instincts might be great, that doesn’t mean they should be your only basis for measuring a business decision. That’s a sure way to make a mistake and leave you disheartened with a failing franchise. Instead base any business decisions on solid research and experience (as well as your gut if you want).
Poor choice of location
Just because you’ve got a brand behind you doesn’t mean that brand will do well everywhere. Ideally you want a location that encourages easy access and organic exposure. Having a building in an obscure business park isn’t going to get you much business if you rely on passing traffic, though it might be fine for an online-based business.
In order to pick the right location you’re going to need to do a lot of research. It’s not a simple case of the place “feeling right” or having good facilities (although that’s important). You need to look at every possible angle. What is passing traffic like, what are the other businesses around doing well/not so well? Is there enough parking space? Is it easy to get to via public transport?
Going it alone
You started a franchise for a reason, so that the company had your back. Don’t start ignoring their advice or procedures when you don’t agree. Not only will this be unlikely to be in your best interests, you could end up harming the reputation of the brand.
Being the first franchisee
You don’t want to be the guinea pig franchisee for a brand. If this is all new to the franchise company, then you could find the road ahead somewhat bumpy.
A franchise company that has a range of successful franchise projects, with training and support provided will be your best option for ensuring future success.
Franchises are expensive business, you’re partially paying for the element of safety and support and also for the brand’s reputation. There may also be more than the franchise fee alone, including legal costs of getting the whole thing set up. You could end up with a nasty surprise if you don’t prepare for these.
Like with any business venture it’s important to have an emergency fund that you can fall back on should an unexpected cost or repair threaten to slow you down.
Are you considering a franchise? What are you doing to avoid these mistakes? Please share your thoughts.