Why Do Franchisees Fail?

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Why do franchisees fail?

Why do franchisees fail? What makes a successful franchisee?

Why do some franchisees fail, while others excel in the same franchise system? How do you pick the winners?  What makes a successful franchisee? 

 

With over 25 years’ experience in coaching and recruiting both franchisees and master franchisees , I have lost count on how many of times I have been asked these questions.

Everyone seems to want the answer ,either master franchisees, potential franchisees or potential franchisors.

No one want to see people fail and no one wants to be the failed franchisee.

Everyone is looking for that secret ingredient to get it to work.

But, There is no straight forward answer.

I have seen people from all walks of life, many different work backgrounds and a diverse range of nationalities attempt to make a success of their own franchise business.

Not all succeed!

A few  will crash and burn in very spectacular fashion .

Many perform to a passable level, while others will excel.

What is the magic formula?

 

I don’t believe it is about intelligence or education .

I have seen university trained professionals fail.There have been accountants, business managers and solicitors fail. I saw an accountant walk out of his business in the first month. A lawyer who spent 6 months auguring with every step of the system to then go back to the protected environment of employee as a suburb lawyer because it was easier.

Alternatively, I’ve seen new immigrants with minimal education and English as a second language excel. It is more about the willingness to learn new skills, than the skills they already bring to the table.

Education and “smarts” is not the key, but “Street Smarts” does seem to be a factor.

 

There certainly is a need to have a level of self-discipline.

Every successful franchise system has documented procedures that are the system. The whole point of jointing a franchise network is to get the benefits of past experiences that will fast track your businesses success.

If a potential franchisee wants to change the systems before the join they will only get worse after they have paid their money.

90% of changes I have seen attempted, by franchisees or master franchisees, are not about making the business more successful. Usually it is about, avoiding their own comfort zone or going cheaper or short cutting for themselves, without any thought about the long-term impact on the business.

All matured franchise systems have systems to implement changes to the system. Systemically testing and measuring procedures is a vital component to every franchise network.

This guarantees the evolution of the system and long term survival of the business. Franchisees can have input to that evaluation of the value of “changes” to the systems

The Franchisee who takes true ownership of their business goes a long way to success.

 

Taking true ownership of their business is I believe is the key underlining “secret” ingredient for Franchisees.

  1. If a potential franchisee is planning to buy a franchise to buy a job,Don’t do it! Go and get a job instead.
  2. If the franchisee decides to join a franchise, then emotionally buy into the business 100%.
  3. The franchisee who takes true pride in being a small business owner will make it.
  4. The franchisee who treats the customers like they are their customers, not the deposable asset of the franchisors.
  5. The franchisee that treats their business like it is their own business will always succeed.
  6. The franchisee who needs help, asks for that support and then follows the advice will that advice will make their business work.

 

There is the other side of the story of course.

What are the franchisors responsibility ?

What are the Franchisors’, (or Master Franchisor), key responsibilities in the failure equation? What are the mistakes made by franchisors that can lead to franchisee failure?

  1. The Franchisor or master franchisor doesn’t even have documented proven systems.
  2. The”Business Opportunity is oversold. All hype and no reality.Over promises.
  3. The Franchisor or master franchisor was no real history in the business.
  4. The training and support systems are not thorough enough.
  5. The Franchisor put the franchise into a finance situation that places huge pressures on the cashflow. This is usually through vender finance or a “special” offer from the bank alined with the franchisor.

 

Why do franchisees’ fail?

It can one of  or a combination of all the above.

Franchising is a great way to do business.

But all parties have to be on the same page. The recruitment systems are vital to educate the potential franchisee to what is expected of them. Overselling at the recruitment stage will lead to a disappointed franchisee.

Support and training systems are truly vital.

Franchisee should systematically been shown  see the manuals through the recruitment process. The franchisor’ support ,training and documented systems are the key ingredients that they bring into the equation .

The attitudes ,of the franchisee and the Franchisor, are the secret ingredients that guarantees success or failure either way.

At Balance Enterprises: We have a mission to empower family business owners to get their Business working for their families either a s franchisees or independent business operates.

Education is the key. Take the time to read.

Robert James

Balance: How to Make Your Business and Family Life Work Together

 

Fit For Purpose Leadership #1 

 

Robert James. 25 years experience as a franchisor. Author and Franchise specialist business coach