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Avoiding Common Franchise Mistakes

As a franchise consultant, a question I commonly hear is “What mistakes are frequently made when you franchise your business?” Here are some blunders to avoid when you franchise your business:

  1. Selling a franchise just to generate money (covered below)
  2. Ignoring prospective franchisee red flags (covered below)
  3. Franchising your business simply to get out of a financial hole (future post!)
  4. Spreading franchises too far apart (future post!)
  5. Not getting to know the prospective franchisee well enough (future post!)
  6. Overselling your franchise opportunity (future post!)

Selling a franchise just to generate money when you franchise your business:

When you franchise your business, the success of your first few franchisees has a tremendous impact on the viability of your franchise program.

The success of your first few franchisees has a tremendous impact on the viability of your franchise program.If your first few franchisees are not successful when you franchise your business, it will be extremely difficult to sell additional franchises. Therefore, it is incumbent upon the franchisor to make sure that its franchisees possess the attributes necessary for success. Having the requisite financial resources is one important requirement.

The prospective franchisees must also be able to operate the business effectively in terms of their work ethic, abilities, stamina, education, experience, ability to relate to customers and any other attributes critical to success in your particular field. When you franchise your business, you must also try to determine if your prospective franchisees share your vision, philosophy and values.

For example, if your business is a quality leader in your industry, and the franchisee wants to cut corners, they could undermine the brand and create problems for your other franchisees.

Ignoring prospective franchisee red flags when you franchise your business:

When you franchise your business, typical franchisee red flags include a history of financial problems, litigation, a bad driving record and similar issues. Any of these concerns may indicate a potential problem and should be closely examined.

Ask yourself:

  • Is the prospect litigious in terms of frequently suing others or being sued?
  • Has the prospect declared bankruptcy in the past ten years? If so, why?
  • If the potential franchisee has credit issues, can they get the money needed to open the franchise location? Is the person fiscally prudent?
  • Can the prospective franchisee support their expenses with the money the franchise is likely to generate?
  • If the person has a great deal of turnover in their job history, do they have the commitment to succeed in your franchise opportunity?
  • Does a bad driving record indicate a substance abuse problem?

When you franchise your business, also look at the prospect’s personal life. Are they going through a divorce? Acting as caretaker for a loved one? Are there potential childcare issues? Do they have health challenges?

These are just some of the pitfalls to avoid when you franchise your business.

Thinking About Franchising?

NFA Franchise Consultants have the experience to help businesses franchise.  Just watch and listen to some of our client case studies and video testimonials.  We can HELP YOU and it doesn’t cost anything to call and talk to us! 

So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form.  We look forward to helping you take your business to the next level and beyond.

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