Challenges every franchisee faces
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.
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.
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.
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.
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.
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.
- ● Evaluate your capabilities. A reason franchises fail is the unpreparedness of a franchise owner to do business both in terms of money and mentally. It is necessary to evaluate your financial capabilities, your knowledge, and skills in order to ensure success. You must consider all aspects before acquiring a franchise. Work hard because a franchise does not automatically guarantee your profit. It is your direct participation that does the trick.
- ● Put in effort to find great staff. Don't be afraid to spend more time finding quality staff and training them. The most important thing in a good business is the high quality of service and products provided. If customers dislike employees who served them, they will no longer return to your establishment, and you will lose reputation.
- ● Listen to yourself. It is important to understand your own interests and goals. Do not get a business that you are not interested in. Any business is always a risk, and you will have to take it on yourself. Only you know what’s best for your future. Listen to yourself, gather information, analyze and decide what’s the best opportunity for you.
- ● Learn about the extent of freedom. Future franchisees must clearly understand that when they’ve bought a franchise business, they have to comply with all established and approved brand standards. The extent of freedom of action you will have must be determined before acquiring a franchise. Find out how flexible the franchisor is to your decisions and proposed changes, and how acceptable this is to you. Only by fully familiarizing yourself with the conditions and requirements of the brand owner, as well as accepting them, can you avoid problems in the future and ensure that you’re comfortable with the way you do business.
Founder of Topfranchise.com
CEO Expedition 2009 - 2014
Author of a book «GROW WITH A FRANCHISE»