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Published On: Wed, Mar 25th, 2015

Tread Carefully: 5 Common Mistakes New Franchisees Should Avoid

Established franchises are known to have minimal risks involved as opposed to new businesses. The business plan of a franchise is already tried and tested, which is why most people prefer to pay for the business plan and the brand instead of starting from scratch.

You can never get rid of the risks that come with owning a franchise, but you can always learn from the mistakes of others in order to make it work for you. Here are some of the common franchising mistakes that you can avoid if you are planning to buy into a franchise.

1. Believing in a “hot new franchise”

As Forbes put it, the term “hot new franchise” is an oxymoron. A franchise exists because the model has been proven to work over a period of time. This means that the franchise should have been a part of the people’s lives for it to succeed.

One good thing about jumping into the franchise business is the guaranteed captured market. Operating a business under a known brand guarantees you that the business model is reliable and sturdy. Don’t be swayed about new businesses calling themselves as the “hot new franchise.” It’s better to work with an old and trusted franchise than giving all your money to something new and untested.

Looking at starting a franchise like McDonalds? Public domain image/ Kcdtsg at the wikipedia project

Looking at starting a franchise like McDonalds?
Public domain image/ Kcdtsg at the wikipedia project

2. Underestimating the costs

The cost and capital of your franchise business should be taken in consideration before you even sign up for the franchise. From the beginning, you should be able to identify how much you should invest to use the franchise model for your own. Aside from paying for the business plan, you also have to consider the amount that it would take to raise the franchise from the ground up. Make sure to discuss the necessary fees that you have to pay for to get the franchise up and running.

When it comes to ROI, some franchises might even take years before you can profit from it. Before investing, you should also be aware of how slow or fast you will turn your investment to profit. As with any business, however, what’s important is your determination to succeed.

3. Disregarding the Fact That You Have a Boss

Running a franchise business means you have to follow a set of rules and operational procedures to make it work. Those who think that buying into a franchise will allow them to be their own boss should know that you’re only the boss of your own shop. You still have to answer to your franchisor in the end. You’re going to have to agree to a number of orders from the higher ups in order to keep your franchise afloat. The rules are in place to guarantee you success, so make it a point to follow the system.

4. Overly relying on the business model

The franchise model allows you to follow a system of rules and processes that are known to deliver a great profit to your franchisor. However, it’s not enough for you to simply follow the instructions.

You should also be able to find your footing in handling the business on your own. Remember, this is your investment after all, so do your research. Consult with other experts and read a lot of available material on managing franchises. Having the right skills in handling your business can definitely help you deal with the problems that might arise along the way.

5. Picking the wrong franchise

A franchise can be uniform and repetitive and it offers no room for creativity or innovation. It’s then important to pick a franchise that is aligned with your interests and your goals.

Try and find the right franchise for you by researching your available options. If you have a passion for food, it might be ideal for you to take over a food franchise. If fashion is more of your interest, getting a beauty salon franchise might be the perfect fit for you. Align your interests with the franchise that you are going to choose so that you would have more impetus to work hard by keeping your passions burning alive.

Finding the right franchise for you requires due diligence on your part. You have to ensure that the franchise you will choose is a proper fit for your personality and interests. Do not be swayed by the popular choice, and always make sure to review your options before investing your money. Hopefully, you were able to gather enough information from this article to help you make your next investment decision.

Guest Author: Gabby Roxas

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  1. Franchise Locators Executive Franchise Consultant earns CFE Designation says:

    […] Tread Carefully: 5 Common Mistakes New Franchisees Should Avoid […]

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