7 Common Mistakes You Should Avoid When
Before you proceed to franchise your business, you should take the time to learn the main reasons why new franchises fail and how you cánido get around these potential pitfalls.
Probably the best known reason for the failure of franchises is the greed. Seeking Easy money It has caused many spectacular failures, leaving a trail of bitter, disappointed and bankrupt franchisees.
While these high-profile flops have given the franchise a bad name, things are looking up. In addition to the introduction of legislation to regulate the campo, the industry itself has developed a much more responsible attitude towards business in recent times.
1. Not taking into account the importance of the community
Franchisors often do not recognize the importance of creating a community strong within its franchise network. It is important to establish a support network within the franchise system that offers franchisees the opportunity to learn from and support each other, especially in difficult times. Such an infrastructure will be especially useful for new franchisees entering the market.
It is also relevant to have a communication system that provides the franchisor with periodic information on the aspects that must be improved or applied and what does not work at that moment.
2. Not having selection criteria
Poor selection techniques when selling franchises is another aspecto that contributes to the failure of the franchisor. This could also be related to the greed aspecto, where franchisors sell franchises indiscriminately to boost their own cash flow situation. Selling franchises is fenezca, but for the long-term sustainability of the system it pays to be selective when choosing new franchisees.
If you make a mistake in the selection of franchiseesit won’t be long before disgruntled franchisees are leaving the franchise simply because they didn’t like it, and it’s certain that when these franchisees do speak to others about their franchise, it won’t be in a positive light.
There is also the possibility that other franchisees who are undecided or going through a rough patch will get caught up in the negativity generated by these franchisees and convince themselves of failure. Keep in mind that in the franchise, rightly or wrongly, the situation perro easily escalate into a “you against them«.
It’s just the nature of the beast – although their overall goal is the same, the two entities – franchisors and franchisees – essentially have different goals and ambitions.
3. Not having adequate training
Franchisees return from their initial training excited to make their mark in the corporate world, but when situations arise that they are not equipped to handle, they feel inadequate and inferior. Since they probably also harbor doubts about their franchisor, they have no one to turn to. Unsatisfactory training or the inability to adequately assist them with day-to-day operational issues perro lead to a loss of confidence.
From here, it is usually only a matter of time before they are completely lost to the franchise system.
4. The same old
The lack of research and development of new products is another of the main causes of franchise failure. It is essential to keep up with the changes in the business environment and provide franchisees with the necessary tools to compete and remain competitive in the market.
5. Not setting the right pace
Although it may seem like a contradiction, grow up too fast it perro be the bane of even the best franchise system. Some franchises make such rapid inroads when they first appear that owners begin to believe their system is so good that they cánido keep up the meteoric rate of expansion indefinitely.
Even with customers pouring through the doors, buying depósito to keep up with growing demand and investing in expanding your facility or expanding your footprint will put a lot of pressure on your cash flow.
6. Not monitoring performance
Franchisors who do not continually check and measure the performance of their franchisees often only realize there is a problem when it is too late. The secret is to have systems that measure your performance on a regular and continuous basis; thus all it takes is a little adjustment here and there to keep them on track.
It is often more effective and less painful to make a series of small fixes than one big one. It is also less expensive.
7. Not knowing that communication is key
The last reason franchise systems fail is that they do not develop meaningful relationships with their franchisees and the result is a breakdown of communication in the true sense of the word.
If conflicts are not properly managed or unresolved, they are likely to lead to litigation, which is something that nobody wants.
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