Challenges every franchisee faces

11.10.2022

Acquiring a franchise can be a rather prosperous business opportunity. Entrepreneurs select a franchise in the preferred line of business and do what they love. There are franchise opportunities in almost every segment. All you need to do is analyze your interests and abilities and pick the most suitable option for you. With franchising you won’t have to start from scratch, you’re presented with a ready-made business.

However, like with any other business, there are some common challenges of franchising that you have to be aware of in order to ensure the success of your enterprise and be prepared for any problems that may appear. Forewarned is forearmed. Understanding these business challenges can help you overcome them and emerge as a winner in any situation.

Common Franchisee Problems and Challenges

Franchising is a complex mechanism, and there are many aspects to consider. Many difficulties may appear that can affect the work of the franchisee and its enterprise. Check out the following challenges that you may have to face in developing a franchise.

Budget Shortage
Acquiring and running a franchise can be a rather difficult affair money wise. As a franchise owner, you pay for the opportunity to use the trademark as a lump-sum fee and royalties, and sometimes as a marketing fee. And this is just the beginning. There are also additional expenses that potential franchisees must consider. These include office rent, supply and equipment purchase, employees’ salary, and so on. Many entrepreneurs don’t understand what they’re getting into and end up failing. The best thing to do is to calculate your budget properly and analyze whether you can afford this business venture. The success of your future enterprise depends on how well you manage the cash flow.


Unrealistic Expectations
When a brand is chosen, documents are signed, and a franchise is opened, a franchisee sighs with relief and prepares to make a profit. However, nothing is so simple. In the beginning there will probably be no profit, instead you will have to invest additional cash. There will be a lot of work. You’re getting into a new business and have to put in a lot of time and effort to learn the intricacies of all processes and ensure the smooth operation of an enterprise. Even though franchising may seem like an easy to deal with a ready-made business model and support from the brand owner, there is still a lot to figure out once you’ve become a franchise owner. Sometimes entrepreneurs don't realize how much work it is and burn out under the load of responsibilities.

Limited Autonomy
One of the major downsides of franchising that you have to make peace with is limited freedom in running a business. Usually, each of the franchisees is monitored and checked for compliance with brand standards, especially at an early stage of business development. A brand owner typically exercises quite strict control over services and goods provided, and working methods. This results in the fact that franchisees may be limited in the management of their own enterprise because they are forced to cooperate in this or that matter with the corporate office. Be ready for this, otherwise many problems and conflicts may occur during the franchise operation. An unhappy franchisee is a cause of failure.

Personnel
Finding good employees to work at your franchise is one of the main challenges franchisees face. It is your responsibility to look for ambitious people, then interviewing and training them. Your management skills and your staff are what makes your enterprise run smoothly. It is essential to ensure that you surround the workplace with people who share your values, goals, and look up to the boss. Another challenge is keeping them motivated and eager to work with you. A franchise owner should be a strong leader who knows how to create a positive environment and keep employees happy.


Communication
One of the most common issues is the lack of communication between a franchisor and a franchise owner. Successful franchising is built on trust, so a good relationship between both sides is essential to overcome any difficulties in setting up and running a business. There should be a productive interaction between the brand owner and its franchisees. Discussions should be direct and honest. This way, both sides win. Many problems can be prevented through communication.

Tips to Overcome Franchising Challenges

It’s true that there are many challenges that you may have to face as a franchise owner. However, it doesn’t mean that you can’t overcome any of the above-mentioned problems. Here are some tips that can help you mitigate these common franchise problems.



Written by
Vasil Gazizulin
Founder of Topfranchise.com
CEO Expedition 2009 - 2014
Author of a book «GROW WITH A FRANCHISE»

 

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