4 Franchising Mistakes Made By Business Owners

The past 10 years have been a great time for franchises. Due to the economic downturn that began in the early 2000s, franchises saw a boom caused by a lack of direct competition and even reduction in competition for employees. The simple fact is that franchises make up around 14 percent of our entire national economy, but this has leveled out due to economic recovery.

The slow end to the recession is definitely good for the economy, but it means that franchises must do a little extra work to stay relevant. The simplest of mistakes can lead to serious issues within a franchise, and this makes it imperative for you to understand the most common (and avoidable) mistakes made in franchising.

Not Being Selective about Franchisees

The whole point of selling franchises is to make the parent company more money, and this causes some franchisors to place their businesses in the hands of anyone who accrues the capital. Unfortunately, this can be detrimental for a company.

Some people, even those with enough money, simply aren’t cut out to be in charge of a franchise. If a franchisor isn’t selective in who they sell to, the mistakes of a bad choice won’t just fall back on that particular franchise; it’ll fall back on the company as a whole.

Growing Too Quickly

A business owner whose company has become successful enough to expand via franchises is likely to want to grow as quickly as possible. This is an easy desire to understand, but it can actually ruin a company. Selling a franchise isn’t as simple as handing the keys over to someone else and saying, “Now go make me some money.” Franchises actually require a lot of training and supervision.

The good part about franchises is that they become more self-sufficient the longer that they’re around. Newer franchises, however, are going to need more attention. This makes opening several franchises at once a disastrous idea. A company’s resources can quickly be exhausted in this way.

Setting Costs Too Low

Setting the price of a franchisee fee relatively low would seem like a good way to bring in more willing investors. Sadly, this often backfires. To offer the right amount of support and training, a business owner cannot afford to set artificially low prices.

Co-Branding Mistakes

Several companies have chosen to co-brand for several reasons that can benefit both businesses. Think of restaurants that have opened on the sides of gas stations. This can often be advantageous for both businesses, but it can also hurt as time progresses

The truth of the matter is that two different companies, especially those from two different industries, often won’t have the same corporate structure. Even worse, there can be conflicts over who is the “head honcho” at the co-branded site. It’s important to carefully consider these decisions and do plenty of research before actually settling on a co-branded company.

Owning a successful franchise is not accident; it takes hard work, dedication and an avoidance of detrimental mistakes. It’s hard to give someone advice on working diligently and devotedly; a franchise owner must choose to do so of his own free will. By avoiding the aforementioned mistakes, however, an otherwise great franchise can continue on its successful path.

Keith works at Charter Franchise Group Inc. They provide the resources, experience and franchise services to help entrepreneurs launch their franchises in Houston, TX.

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Marty Huggins

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