Franchising is an excellent way to break into business ownership or explore a different side of ownership if you’re a veteran. According to industry experts, in 2019, there were 773,603 active franchises in the U.S. alone. Of course, like any business venture, in franchising, there are plenty of mistakes new franchisees make.
You will be surprised to learn that just because franchises often have proven business models, an unparalleled support system, and have worked out the kinks long before you arrived, it does not guarantee your success. However, I know a few common mistakes to look out for and how you can avoid them.
Below, I touch on a couple of examples of mistakes new franchisees make. And should you have any questions, feel free to schedule a call with me!
Not Using Your Resources
Franchises are well-known for being one of the few investment opportunities that provide unparalleled ongoing support. In fact, it’s one of the most significant reasons why many entrepreneurs opt for franchising versus starting their own businesses from scratch. Not taking advantage of these resources, namely the access you have to other franchisees, is one of the mistakes new franchisees make.
They are perhaps one of the most underused resources out there. Reaching out to fellow franchisees allows you to gain insight into the franchise and business ownership, but it also provides you the opportunity for reassurance. Ask the franchisor to put you in touch with franchisees whose background is similar to yours. They might be able to inspire you and gives you tips on challenges to look out for.
Underestimating the Costs
Luck favors the prepared, and one of the mistakes new franchisees make is not having additional funds allocated for unforeseen costs. There is so much money that goes into running a franchise, especially within the first year, from legal fees and working capital to construction, equipment, and employee costs.
Before buying the franchise of your dreams, I recommend requesting a comprehensive breakdown of what’s expected of you financially, along with any other costs that might crop up throughout your career. It can increase the likelihood of a healthy business.
Skipping the Research (or Not Doing Enough)
I know that it is easy to get swept up in the excitement of buying a franchise; the possibilities seem endless! However, at the top of our list of mistakes new franchisees make is they don’t do enough research on a franchise opportunity before making a firm commitment. You must know what you’re getting into.
Don’t just settle for the words of your potential franchisor. I encourage you to do Google searches, read forums and reviews, and even enlist the assistance of franchise consultants like me to help you vet the franchise and ensure it’s a quality franchising opportunity. You will want to learn about their franchise system (as each one is different) as well as their training style, location, and past financial or legal troubles.
Following the Crowd
The thirst for success often drives us. As business owners, sometimes that thirst can lead to trouble, such as investing in a business opportunity that isn’t a good fit. This is yet another one of the mistakes new franchisees make. Just because everyone is flocking toward that kind of franchise doesn’t guarantee that it’s meant for you.
There are 95 different franchise categories, meaning there are countless more opportunities for you to find something that makes you happy, aligns with values and capabilities and brings you success. Following the crowd can lead to you making poor business decisions (like burning through your financial resources) and not putting your all into your work. Most franchise agreements are between five to ten years, so if you’re not happy, it can make for a long and challenging few years.
Blackmore Franchise Consulting
There are many opportunities for missteps as a business owner, even with a proven model on your side. One of the primary ways to avoid the mistakes new franchisees make is to do your research and take advantage of the resources at your disposal. One such resource is my services here at Blackmore Franchise Consulting.
Armed with my 25-plus year of franchise industry knowledge, I can help find the perfect franchise opportunity for you, guide you throughout your career, and answer any questions you may have. The first step is for us to chat so I can get to know you, your values, and your goals.
Are you ready to get started? Contact my team today, and let’s chat!