9 mistakes to avoid when starting a franchise

9 mistakes to avoid when starting a franchise

If you are considering starting a franchise business, you have probably seen many sales launches recently. Franchise teams create super sophisticated sales networks: websites, brochures, sales representatives, etc., all working in sync, without stopping, to sell you their franchise.

What you will not hear often is that owning a franchise can be as risky as owning any other small business. That is why today I bring the biggest mistakes that are always made when creating a franchise and how they can be avoided.

starting a franchise

Error # 1: Start under capitalized and poorly informed

Do not invest in a franchise where you could be under capitalized. Running a new business is challenging and not always immediately profitable. You must make sure you have enough capital to operate a few years with losses or few gains.

Also, not doing a complete job on initial investigations and discovery calls is risky. You can also use many of your assumptions and these can be quite close. However, I suggest you ask very detailed questions during the discovery process and listen carefully to the answers. Often, what is not said is as important as what is said. Make sure you have the necessary capital before starting a franchise.

Error # 2: Let yourself be dazzled by fashion companies when starting a franchise

The main mistake may be to focus on a business just because it is fashionable, rather than one that best suits your interests, abilities and budget.

For example, with the retirement of baby boomers, caring for the elderly is a flourishing market. The demand for nursing home care in particular is likely to trigger in the foreseeable future. But these facts sometimes obscure the judgment of potential franchisees, which makes them overlook other potentially profitable industries for which they might be more suitable.

In the case of care for the elderly, although there are franchises that do not require a history of medical care, you should be passionate about caring for the elderly in your community. If you don’t have that passion, you better try something like cleaning / maid services, where you still have low overhead and strong growth potential.

Take the time to research and find a business model that is profitable and that you like. The last thing you want to do is invest tens of thousands of dollars in franchise fees and installation costs just to realize that this was not the right business for you.

Error # 3: Underestimate the costs of starting a franchise in a business plan

It is necessary to put together a better business plan. You have to clarify the facts before making a presentation to the investor. And don’t feel that you have to buy the best of the best, buying used is also valid. Even then, plan to spend more than expected.

Error # 4: Do not follow the franchisor’s system

“Just follow the system.” It is advice that you will listen to several times and although in your mind you are doing it, maybe you really are not. FOLLOW THE SYSTEM.

After some time you can realize that, your growth is not, where it should be and you will have to make adjustments. Once you start following the system completely, you will achieve the results you wanted when you first bought the franchise.

Error # 5: Not knowing how to delegate in a timely manner

A person cannot do everything. It is important to realize this in order to evaluate which parts of the business you will manage and for which areas you will need qualified personnel, to support you in the development of the project. If you do not take this into account in time it is possible that the burden will distract you and lose sight of some tasks that are not being done properly. Do not be afraid to ask for advice and delegate.

Error # 6: Become complacent in the marketing of your franchise

Never slow down your marketing efforts, even when you start testing success. Don’t settle for complacency! Your marketing efforts must be continuous. You must analyze the effectiveness of each point of sale. Then you should share effective strategies with your fellow franchisees.

Error # 7: Deviating unnecessarily from your franchise business plan

Do not unnecessarily deviate from your business plan without a good reason. The biggest mistake to avoid is to make general assumptions about your business. Before making changes, it is necessary to do an investigation. Get as much data as possible to make good decisions.

Do not assume that other people with experience in the industry are always right or always wrong. Look at all the problems, compare the pros and cons, then make a decision that fits your business plan.

Error # 8: Think you know everything when a franchise starts

Do not fool yourself and think that your “vast” business history will automatically turn you into a successful franchisee. Learn from other franchisees. Promote relationships with other franchisees in your area and throughout the country. You learn more from franchisees in your area than you can imagine.

You can’t do it all yourself. If you have done your homework, you should be part of a franchise system with a good support structure. There must be resources to turn to for help, guidance and advice.

Error # 9: Expect a franchise to be a business in a box

Many new franchise owners expect to buy a business in a box, and expect that when they open that box they will have customers waiting at the door of their home. For most franchisees, that is not the case.

You must invest time and energy in developing the franchise brand in the territory or region where you have a license to operate. While the franchisor supports the franchisee, the franchisee still has to dedicate time, effort and energy to grow the business in the local market.

The advantage of having a franchise is that you can avoid many of the mistakes that small business owners make because there is a good support structure. This is especially true the more mature a franchisor is.


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