image 7 Biggest Franchise Management Mistakes (and How to Avoid Them)

7 Biggest Franchise Management Mistakes (and How to Avoid Them)

What if the reason for your franchise failing was staring back at you from the mirror? 

When opening a franchise, most entrepreneurs expect that running such a business will be easy. While being a franchisee is easier than opening your own business, it is still common to make simple mistakes that can add up and potentially sink your new business endeavor. 

Fortunately, we’re here to keep that from happening. Keep reading to discover the biggest franchise mistakes and how to avoid them! 

1. Should You Avoid Investing in a Passing Trend? 

One of the biggest red flags regarding a franchise opportunity is when the franchisor describes the business with words like “hot” and “new.” Why a red flag, though? Simple: the strength of a good franchise is that it is built around a successful and established business model, which is why many entrepreneurs like to sell things like personal lines on behalf of successful insurance companies. 

If the franchisor has business opportunities built around a genuinely new kind of company, then there is a danger you’re investing in a passing trend that may fail within a few years. In our opinion, you should focus more on successful (long-term) businesses that better ensure franchisee success 

2. Should You Be Worried About Funding? 

The good news is that franchising is cheaper than starting a new business from the ground up. The bad news is that franchisees often underestimate what the costs will be and fail to secure enough funding ahead of time. 

For example, you need to know that even a successful franchise may not begin generating profits until a few months after it opens. If you focus too much on franchise management and not funding, your new business may fail before you know it, especially if the interest rates catch you by surprise. Conversely, if you do your research ahead of time and get as much money as you need, you can make those first few months of operation easy and painless. 

3. Do You Need to Enlist Help? 

Most franchisees, if they are being honest, got into this business because they heard those four magic words: “Be your own boss.” It’s true that you’ll have much more independence than you ever had before as, say, a regular employee. But you need to avoid the rookie mistake of ignoring your franchisor’s support system when you really need it. 

Remember, your franchisor is there for much more than your initial training and support. They know about every aspect of running your business successfully, including making headway in the local community after you open it. Don’t be afraid to turn to them when you have questions…making use of all your resources will better ensure the success of the business. 

4. How Important is Fine Print? 

Perhaps the best thing about franchising is that everyone involved knows what they are getting into. There are far fewer variables to deal with than when starting from scratch. However, if you don’t read the fine print of your contract, then you may end up shooting yourself in the foot before the location even opens. 

The contract will cover things like how much you must pay in fees, but it also outlines any restrictions you may have. Long story short: if you don’t read every word of the fine print, it could be the most expensive mistake you ever make…literally! 

Man examines contract

5. How Much Does the Location Matter? 

If you’ve never been a franchisee before, the good news is that you don’t have to reinvent the wheel. Many of the classic business principles still apply, including the oldest advice of all: “location, location, location.” 

This is why you should never settle for a franchise location in what you know to be a bad area. Chances are that you are opening a franchise in your existing community, so use your judgment about where you think locals will actually visit. Avoid industrial parks if you can and try to pick a location that has high visibility and, preferably, existing foot traffic. Ultimately, your location is even more important than how you brand your business

6. Is Legal Help Necessary for Success? 

There are many fees associated with opening a franchise, including ongoing fees you must pay to stay in business. Because of that, some entrepreneurs put off hiring a lawyer until it’s too late. Worse still, some entrepreneurs never hire a lawyer at all. 

Make no mistake: you’ll need a lawyer to understand all the complex legal language of your contract. Plus, if this is your first time running a business, a lawyer can help ease the learning curve for you. In this way, such legal help more than pays for itself in very short order. 

7. Are Franchisor Rules in Your Contract Important? 

As we said before, many are attracted to the idea of becoming a franchisee because they like the idea of being their own boss. Unfortunately, some entrepreneurs take this idea a step further and ignore franchisor rules and instead run the new business how they see fit. 

While that may seem like an attractive idea, it’s honestly one of the worst things you can possibly do. For one thing, ignoring the rules and restrictions of your franchisor contract may open you up to legal action and having your business taken away from you. For another thing, the rules are in place to help ensure brand consistency and provide franchisees with a solid growth strategy. At the end of the day, if you really want to do everything on your own, you’re better off opening your own business than franchising. 

Start Your Successful Franchise Journey Today! 

Now you know what the biggest franchise management mistakes are and how to avoid them. But do you know who is ready to help you begin your own successful franchise journey? 

Here at Confie, we know how to respect drive and talent like yours, and we’re ready to work with you so that we can both achieve our dreams. To discover what we can do to help you open a successful franchise in your community, feel free to reach out online or give us a call at 714-252-2500