Buying a franchise means to realize your entrepreneurial dreams while avoiding many of the inherent risks that come with opening a business. In the competitive business arena, the fluctuating consumer trends, and volatile economic tendencies, building a brand from scratch might not be the most viable option, which is why franchises are rapidly growing in popularity across the globe.
That said, there is no guarantee that your franchise will be successful. There is nothing that can drive a business straight into the ground like its founder and general manager, so if you are to assume the mantle, you will need to avoid many common mistakes your peers tend to make. Here are the five pitfalls you need to watch out for before you but a franchise.
Personal opinions vs diligent research
In the modern business world, diligent research will mean the difference between long-term success and a very sudden demise. If you focus solely on the positive aspects of an industry or consider a single franchise instead of looking at numerous candidates, you are not only limiting your options, but are also taking a huge risk. You need to know everything there is to know about your industry and the available franchises before you invest.
Only by acting on relevant, data-driven insights, will you be able to plan and strategize for the future, organize your finances accordingly, and tailor your marketing approach to your local market. In order to conduct thorough research on all fronts, you will need to:
- Assess your financial situation.
- Go through every available franchise in your preferred industry.
- Analyze the viability of the industry in your local market.
- Determine the unique strengths and possible weaknesses of every franchise.
- Narrow down your selection to those franchises that offer a high level of support.
Launching without a sound financial structure
Finances make the business world go ‘round. While there are numerous critical considerations you need to take into account, finance management might just be the most important aspect of long-term success. Not only do you need to have a financial plan before you approach a franchisor, but you also need to prove your creditworthiness.
Simply put, by improving your credit score, you will become eligible for a loan, and you will show potential franchisors that you are careful, organized, and responsible with how you handle your finances. Next, tend to thorough screening of available franchises and assess their growth potential vs the investment amount needed to get in the game. Don’t make the mistake of thinking that the franchisor will handle your finances for you, or that they will sell you the franchise if you don’t have a sound financial plan.
Opting for a less-than-perfect location
Another big mistake aspirin franchisees make is skimping on the location. Always keep in mind that these types of small business opportunities need to cater to the local community, and stand out in the local marketplace. With that in mind, it’s imperative that you invest in a prominent location from the get-go rather than try to save up on rent by settling for a second-grade venue.
Not only is an appealing location important for putting your brand in front of the right audience, but it will also play a vital role in getting your franchise request approved. The franchisor might not be as eager to sell you the rights to open your store if your choice of location is less than adequate. Rest assured that the franchisor will research your local market, and will expect of you to invest in a location that will immediately capture the attention of the consumers.
Follow the brand book and don’t stray
Nobody is doubting your leadership skills, or the effectiveness of your preferred management style. However, none of this should matter because you are joining a franchise that has clearly outlined the proper management procedures in its brand book. You might feel inspired to take matters into your own hands and try to do things in a different way, but this could harm your business in the long run.
Firstly, you need to believe in the franchisor. These are solid business structures with a proven track record and a high success rate, so chances are that their management teams know what they are doing. It’s best to follow in their footsteps. Secondly, you might inadvertently violate your franchise agreement. If you stray too far from the brand guidelines, you might get on the franchisor’s bad side and lose your business – don’t allow this to happen.
Ask for help and you shall receive it
Lastly, don’t try to do it all on your own. The whole reason why got in the franchise game in the first place is to take advantage of the high level of organizational and financial support the franchise brings to the table. So instead of taking on this challenge on your own, exercise your right to seek help from your franchisor.
Work with the head honcho on crafting an effective growth strategy for your location, create a compelling marketing plan the local community will like, tend to meticulous financial forecasting, and hire the right people per the brand’s guidelines. Having this kind of organizational support will mean all the difference in the long run.
Becoming a franchise owner is an amazing way to realize your entrepreneurial dreams while minimizing liabilities along the way. That said, there are still numerous pitfalls waiting on the road to success, so be sure to take these insights to heart and use them to ensure your success in the industry.
Lauren Wiseman
Lauren Wiseman is marketing specialist, contributor to bizzmarkblog.com and entrepreneur. She helps clients grow their personal and professional brands in fast-changing and demanding market, strongly believing in a holistic approach to business.