The franchising world has a minimal margin for errors, and getting caught up in the nasty trap of mistakes can cost you your investment. If you avoid the common mistakes that can sink your franchise, you will have a remarkable chance of growing your franchise enterprise. Below are some of the pitfalls you need to steer away:
1. Skimming through legal documents
You have to go through the legal paperwork such as the franchise agreement and the disclosure agreement to ensure that you fully understand. You shouldn’t do it alone. Before signing the legal paperwork, consultation with an experienced lawyer is vital to avoid problems later.
2. Not doing thorough research
Research is a crucial aspect of franchising. As such, do not rush through doing your homework just because you found what seems to be a well-fitting franchise. You need to conduct thorough research because some franchisers may look appealing from afar, but a thorough investigation may reveal that they are a far cry from being perfect.
3. Straying from the proven franchise system
You need to understand that a franchise used a proven system to get where they are; therefore, you should refrain from straying from the system as a first-time franchisee. Second-guessing the franchise system can lead to a repetition of mistakes made by the franchisor or other franchisees. Stick to the plan and follow it to the letter and not just the bit and pieces that please you.
When coming up with solutions for a specific problem, always make sure it fits the brand. The strict rules implemented by franchisors helps build a consistent and reliable brand to get the same experience from each franchise. Note that the franchise agreement calls for you to follow the plan.
4. Not talking to other franchisers
The great thing about being a franchise is that you become part of a broad team. Ensure that you cultivate connections with other franchisees in a similar market. Learn from their failures, success, and other franchisees’ overall experience by asking as many questions as you can. The existing franchisees may help provide tested first-hand information on the reality, problems, and tasks that make up the running of a franchise. As you carry out investigations, talk to as many as possible and be keen to include an array of top, middle, and lower performers for a more in-depth and diverse overview. They can help you paint a realistic evaluation of the franchise.
5. Not having adequate capital
You may have the upfront costs and the fee that the franchisor requires, but you need to keep in mind the fact that you are likely to meet plenty of additional expenses such as employee’s payments and marketing costs. If not adequately prepared for the costs to exceed the initially stated amounts, then getting money to cover the business’s operations as it gets off the ground becomes harder. On the other hand, you should be careful not to overestimate the costs of running the franchise for the first few months because this can leave you broke even before the full establishment of the business. Financial advisors and research can help you get a more realistic understanding of how much you need to spend to get a successful kick-start.
6. Expecting too much help from the franchisor
While most franchisors offer support in numerous areas such as training, operations, marketing, and more, their support is limited. Some franchisees expect too much help, and they think that they don’t have to worry about running the business. However, this can’t be further from the truth.
A franchise system works on providing an opportunity to get up and run your business as the ultimate person responsible for your business’s failure and success. The franchisor only offers limited support and brand recognition. It’s up to you to get new customers to build your franchise.
With these common franchise mistakes on your fingertips, you can go ahead and build a stronger small business. With hard work and a little patient, you could be on your way to expanding into another location.