image 6 Biggest Franchisee Hurdles (and How You Can Overcome Them)

6 Biggest Franchisee Hurdles (and How You Can Overcome Them)

Regarding your franchise, what if you didn’t realize you made a potential mistake until it was possibly too late? 

This is something many entrepreneurs experience when they first open a franchise. There are obviously many amazing benefits to owning a business, but there are also hidden hurdles entrepreneurs don’t find out about until it becomes much harder to resolve. 

What are the unique hurdles you face as a franchisee, and how can you overcome them? Keep reading to discover the answers! 

1. High Operating Costs 

If you’re considering becoming a franchisee for the first time, one of the biggest obstacles you need to be aware of is the high costs of operating the business. There are also significant rewards, so we want you to be as financially savvy as possible when going into it.  

For some of the bigger “name brands” out there, it can cost over a million dollars to open a franchise, and that’s not counting the many thousands of dollars you’ll pay in franchising fees each year. It’s possible to clear this particular hurdle by finding reliable lenders and then securing the best possible rates.  

However, another way to avoid exorbitant costs (and the attendant cash flow management problems) is to focus on working with a franchisor who won’t charge you as much. By going into businesses with lower overhead, such as insurance, you can avoid the upfront costs while still maximizing profit, especially with the right branding

2. Employee Turnover 

You can try to fight turnover by creating a supportive office culture that celebrates employees and generally keeps morale as high as possible.  Turnover is a major problem facing businesses everywhere, and employers are spending greater amounts on hiring and retention. Current projections show that turnover in the business sector could reach as high as 24% in the next few years. Depending on the industry, that number can climb even higher; the restaurant industry, for example, has turnover rates as high as 75%. 

However, the best way to fight turnover is to go into a business that has very little of it. Historically, the insurance industry has had a turnover rate of around 9%, and although that increased slightly in recent years, it was due to mitigating circumstances such as the COVID-19 pandemic that affected all industries. 

In short, by going into an industry with historically low turnover, you can dodge plenty of future headaches. 

3. Less Autonomy Than Expected 

Let’s face it: one of the biggest reasons to open a franchise is that you want to go into business for yourself. There is something very attractive about being your own boss, but some who join up with a franchisor get discouraged when they discover how much the franchisor is involved with things like marketing strategy, hiring, and retention. 

In other words, entrepreneurs get discouraged when they realize the job comes with less autonomy than they originally expected. However, this is more of a psychological hurdle than a business obstacle. Once you realize that you and the franchisor are on the same team when it comes to making a profit, any anxiety regarding having less autonomy will be replaced by relief that you have an effective support system in place to help you with things like important deadlines. 

Franchise owner goes over the books and finances

4. Brand Consistency 

Sometimes, newer entrepreneurs struggle with maintaining the brand consistency of their new franchise. It’s easy to see why—it can be hard to understand how much the entrepreneur is responsible for branding and marketing versus the franchisor. 

However, like many potential issues with the franchisor, it’s possible for you to resolve this through clear and consistent communication. When you and the franchisor each know which part you will play in branding and marketing, you can avoid stepping on each other’s toes. Even better, you can work together collaboratively on your shared goal: sustainable business growth. 

5. Oversaturating the Market 

Most of the problems we have outlined so far are hurdles that you’ll have to clear once you get to them. However, there is one potential hurdle you can avoid altogether, and that’s the potential to oversaturate the market. 

Think about the restaurants and other franchises you are familiar with in your area. Everyone can think of at least one instance where two of the exact same business were so close together that they ate into each other’s profits. In short, this is what happens when the market is oversaturated. 

Fortunately, you can avoid having to deal with this by carefully selecting your franchise location from the get-go. By picking a location far away from other franchises, you can sidestep the problem of oversaturation altogether. 

6. Standing Out From Other Businesses 

One of the challenges you will face with a franchise is the same challenge faced by all entrepreneurs when they open a new business. Specifically, you need to figure out how to make your own business stand out from the competition. As noted above, that competition may include nearby locations from the same franchisor, but it will also include other businesses operating in the same industry. 

The best way to clear this particular hurdle is to leverage your knowledge of the local area. Be sure to join local groups on Facebook and other social media platforms to learn more about what residents want from such a business (and just as importantly, what they don’t want). Such knowledge allows you to utilize niche marketing messages that speak to the local community. In turn, they will be likelier to choose your business than a competitor who is merely spouting empty slogans. 

Open a Successful Franchise Today! 

Now you know more about the biggest hurdles when it comes to franchise ownership as well as how to overcome them. But do you know who can make going into business for yourself easier and more stress-free than you ever imagined? 

Here at Confie, we take care of our franchise partners every step of the way. Ready to discover what it’s like to be your own boss? Feel free to reach out online or give us a call at 714-252-2500