Articles
Top 6 Reasons Why Franchisees Fail
By: Susan E.
Wells
- Failure to select a franchise system that will succeed.
(See Article entitled "Top 10 Reasons why Franchise Systems
Fail")
- Failure to do their due diligence with respect to the franchise
system and the franchisor's management. Has the franchisor
fully developed the franchise system or does it have a "to be
developed" training program or operating manual? Does the
franchisor have the experience and financial stability to provide
the training and expertise that you lack and to operate, develop
and maintain the franchise system? Is the franchise system a
proven concept or are you getting in on the "ground floor?"
- Failure to select a franchised business that is a good fit for
them. Do you enjoy what you will be doing? Do you have
the appropriate aptitude and demeanor for the business? Are
your financial, operational and other expectations
reasonable? Are your financial, operational and other
expectations consistent with financial, operational and other
realities? Talking with existing and former franchisees can
provide you valuable information.
- Failure to understand that the franchisor will not run the
business or guarantee the success of the business. Although
franchisors are responsible for providing the tools to assist you
succeed in your franchised business (such as training, access to
equipment and inventory, an operating manual and operational
advice), it is your responsibility to select the site and operate
the franchised business in accordance with the franchise system's
requirements and guidelines and in accordance with sound business
practices.
- Failure to follow the franchise system's requirements and
guidelines. Assuming that the franchise system is a proven
concept, its success is, in whole or in part, attributable to the
policies and procedures adopted by the franchisor. Failure to
follow those policies and procedures may lead to failure of your
franchised business and will likely lead to an acrimonious
relationship with your franchisor (if not termination of your
franchise rights).
- Failure to properly capitalize the franchised business.
It takes money to make money. Undercapitalizing a business is
a sure way to waste your time and any assets that you do
invest.
3200 North Central Avenue
. Phoenix . Arizona