Make your franchise a success by avoiding these pitfalls
Owning your own business can be a dream come true, and becoming a franchisee is one of the best ways to achieve such a goal. Owning a franchise allows entrepreneurs to run their own business but still have the support and name recognition of a national or regional brand, making the early days of franchise ownership more manageable.
However, owning a franchise is not without its potential pitfalls. In an effort to help your franchise endeavor be as successful as possible, BOSS has assembled the following list of the top five common mistakes to avoid when becoming a franchisee.
- Failing to do enough research
Some franchisees are so enamored with the idea of running their own business that they jump into the business as quickly as possible. Make sure that the franchise is a good fit for you and your interests. You’re going to be spending a lot of time running the business and you want to make sure it will hold your attention.
Equally important, take the time to review the franchisor’s business model, its history in your area, and the amount of support it provides. This can be done by talking to other franchisees, checking with the Better Business Bureau, and researching helpful sites such as Franchise Business Review, which offers reviews of franchises by business type, location, franchisee demographic, and more.
- Giving in to fads
We are inundated with trends being hyped on television and social media, but it is important not to be too easily convinced that starting a business based on the latest craze is a good idea. A few years ago, fidget spinners were everywhere but there are probably no entrepreneurs in 2019 wishing they had opened a store devoted to them. Fads come and go, but your business will, hopefully, be earning you money for years to come.
Franchises such as McDonald’s, 7-Eleven, and Subway are known around the world for a reason, they have products people want and a brand they recognize. The aforementioned franchises are not only well known, they are also regularly listed as some of the top franchises to own by sites such as Franchise Gator. This is not to say that you can’t follow your passion when deciding which franchise interests you, but you need to be careful not to pick a trendy business that could be out of style in a few years.
- Trying to do it alone
People who become franchisees tend to have an independent spirit; this is what drives them to own their own business in the first place. However, it’s important to realize that an undertaking such as opening a new business is best done with some assistance. Right from the start, it’s important to seek out the advice from a franchise attorney. A good franchise attorney will help you fully understand the terms of your agreement and offer professional advice so you get the best deal. Find one near you by consulting Upcounsel which lists the top 10 franchise lawyers by city.
Another key to success is seeking out and accepting training from the franchisor. Some franchises, such as Sport Clips, are known for their extensive and helpful training programs. Seek advice from franchisees at other spots and ask how their training was to get a good idea of how the franchise will help you in your venture. In most cases, the franchisor will offer ongoing assistance because your success as a franchisee reflects well on the business as a whole.
- Not having enough capital
Sure, there are franchise fees and upfront costs that the franchisor will let you know about from the start, but franchisees also need to be prepared for additional costs, including marketing and paying employees, that could exceed initial expectations and be harder to cover as the business gets off the ground. A financial advisor from Merrill or Morgan Stanley can help you get a realistic understanding of how much you will need to get off to a successful start.
Of course, securing capital is often the trickiest part. Personal loans, lines of credit, small business loans, and more are available to those looking to start a small business, meet with a banker to learn which loans you are eligible to receive. If bank loans won’t be enough, try to find franchise such as Chem-Dry Carpet Cleaning and Cruise Planners that offer financial assistance to qualified franchisees.
- Not analyzing the market
Typically, the franchisor will help you find an appropriate location, but this is another area where you need to do some research on your own. Look at other businesses around your potential location and decide whether they will help or hinder your success. Is there a good amount of foot traffic that can bring people in who are just walking by? Are there established businesses that will be competition and already have a foothold in the market?
Talk with the franchisor about their marketing strategy for the area. The franchisor knows what has worked in previous locations and you might have local insight that further contributes to the strategy. Working together, you can develop a unique plan that leads to incredible success.
Now that you know the most common franchisee mistakes to avoid, you’re ready to be an unbridled success as a small business owner. Start taking the first steps to becoming a franchisee and, with a little patience and hard work, before long you’ll be ready to expand into another successful location.