Avoiding the Pitfalls: Five Reasons Franchise Startups Fail and How to Avoid Them

There are plenty of great reasons to turn your existing business into a franchise, but there are also some risks. Here are five of the most common reasons why franchises fail and what you can do to ensure this doesn’t happen when you take the leap:

Franchises Are More Than Legal Agreements and Operations Manuals

Franchise opportunities provide clear structure, making it easier to get started and implement the brand consistently. However, there’s a lot more to success than just implementing a few rules. Look at your franchise from both sides – writing a legal agreement that takes both sides into consideration is imperative to long-term success.

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It’s also important to know the demographic characteristics of your target audience and hone a product around the desires of that audience – which varies from territory to territory. Franchising helps you expand where you do business, but you need to consider how each area differs. This about where your franchise will be most profitable and what you need to do to ensure you’re a good fit in a particular market.

Next, consider whether ongoing fees are necessary. What do you need to keep your franchise outlets up and running, and keep your franchise investors happy. You are legally bound to support franchisees, and knowing what that takes – and how much money that takes – right from the beginning of the relationship is essential.

Long-term support and marketing are also important. As a franchisor, your job is two-fold – first, you need to make sure your brand is strong and consistent. And you also need to offer support for your franchisees – training, attention, whatever that might be. Getting these two things right is an important part of growing a successful franchise.

And lastly, make sure you are taking on the right franchisees. You might think these are the people with a desire and the money to invest, but you need to look deeper than that. Grow slowly if necessary, but make sure those working with your franchise are a good fit.