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Most Common Franchising Mistakes

Written by: Sebastien Page

Article Overview: Franchising can be a wonderful, fulfilling experience – but it can also be a depressing, disenchanting experience. Unfortunately, there are a number of franchisees that, much to their discouragement, are faced with the harsh realities of franchising. Why? Take a look at the following mistakes many entrepreneurs attempting to become franchisees make.

Most Common Franchising Mistakes

Franchising can be a wonderful, fulfilling experience – but it can also be a depressing, disenchanting experience. Unfortunately, there are a number of franchisees that, much to their discouragement, are faced with the harsh realities of franchising. Why? Take a look at the following mistakes many entrepreneurs attempting to become franchisees make.

1) They're just not suited for franchising. Sometimes the simplest explanation is the correct one. Before you invest in a franchise, take the time for some good old self-evaluation: are you ready to be a team player in a larger organization and adhere to that organization's guidelines and structure? If this concept makes you uncomfortable, you might want to stick to being an independent business-owner.

2) They weren't knowledgeable enough about the product they're selling. A good rule of thumb is that you should always know about whatever it is you're trying to sell. How can you promote something if you don't know it inside and out? Are you comfortable selling the product, knowing what it's all about? Due diligence is a must – be sure to do it before you invest!

3) They neglected to talk to other franchise owners. Get an idea what franchising is all about and talk to other franchise owners -- knowing a little bit about one franchisee who happens to be relatively successful isn't enough. Make sure you talk to several franchisees with varying experiences so you know for sure whether or not investing in a particular business or concept is right for you.

4) They underestimated the costs. Many a franchise owner will prepare for the initial outlay of money but fails to prepare for the ongoing financial needs that come with his investment. Do the math beforehand: make sure your detailed budget allots for both startup costs and operational costs for at least three years.

5) They didn't read the franchise agreement carefully. It's amazing how most people skim over important documents when they really ought to read them. I know it's tempting, but don't do it. It's crucial that you understand the terms of your franchise agreement, and the UFOC/FDD document as a whole.

6) They didn't have adequate legal counsel on hand. Franchise agreements are long and complicated; it's good to have a good attorney on hand who can explain the terms to you. After all, you don't want to sign documents you don't fully understand!

7) They don't get everything in writing. Be sure to get everything in writing. You want documentation of every promise they've ever made to you, because you don't know when you'll need to pull that documentation up!

8) They failed to carefully assess the competition. Just because you've got a good location doesn't mean you'll be successful. Be sure to evaluate your competition and plan a competitive strategy before opening your franchise.

9) They underestimated the time commitment. Operating a franchise takes more time than many new franchisees realize. Sure, it's advantageous to start out with a recognizable name, but running a business is running a business, all the same. Be sure that your family and loved ones are behind such a huge commitment.

10) They lacked adequate marketing. Products don't sell themselves. A particular product may be recognized by the public, but the public also recognizes the products provided by your competition. In order to be successful, franchisees need to do their share of local marketing and promotion, because the franchisor can't do it all.

Related Articles
  The Top 7 reasons why Franchising is Better than a Brand New Business
  Franchising Mistakes and how to avoid them
  Financing Your Franchise Business
  Franchising Is a Better Path to Success than Opening a StandAlone Business
  Franchising Overview

Article Tags: budget, discouragement, due diligence, experiences, franchise agreement, franchise owner, franchise owners, franchisee, franchisees, harsh realities, independent business owner, initial outlay, little bit, math, money, operational costs, rule of thumb, self evaluation, startup costs, team player



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Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
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Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Re: Hello from Captain Franchise - Hi BuzzAroundBooks, I actually found the site in my search for franchise networking. We're looking to make connections and also inform the general public about franchising. Franchising is often misunderstood because of the lack of knowledge. We're here to help and learn as well! Thanks!


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