When Franchising Your Business Temper Expectations
by Ed Teixeira
Often times a start-up franchisor shares the same expectations as a new
franchisee. Both see future success and a smooth road but neglect potential pot
A component of franchise industry growth is built upon a foundation of new
franchisors that arise from independently owned businesses. Many of these new
franchise companies grow into successful franchise systems. However, there are
others that fail to achieve their goals. Several months ago I wrote an article
Startling Franchise Industry Statistic. It revealed that 1 in 6 franchises
listed in a leading franchise directory had 5 units or less. The majority of
these franchisors have failed to grow because they failed to successfully launch
building the franchise program is an important step in the franchising
process, as well as establishing the franchise fee, royalties, territory and
other key elements of the franchise program. At this stage in the franchising
process the goal is to build the right franchise program and design the tools
that new franchisees will need to be successful.
Once the franchise program has been constructed the next step is to launch
the new franchise. In my opinion this is where many new franchisors fall short.
The best franchise program with the right tools canít overcome an unsuccessful
There are several reasons why some franchisors fail to successfully launch
- The start-up franchisor either lacks the capital or is
unwilling to commit the capital to franchise development.
- The franchise program has some flaws that turn off
- The franchisor lacks the staff and/or knowledge necessary to
grow the new franchise network.
- The franchisor commits more capital than necessary to
the design and building stage of the new franchise and lacks the
capital to launch the franchise program.
- Overly optimistic advice by franchise consultants creates
unrealistic expectations on the part of the new franchise
How to have realistic expectations:
- Businesses considering franchising should gather information
from several sources including franchise consultants. Focus on
understanding whatís needed to develop a successful franchise
- Put your ego aside. Unless youíre a franchise expert,
business owners need to listen to those who have a strong
understanding of franchising. Think walking before running.
- Watch how you spend your capital. Devoting the bulk of your
capital to building the franchise can be a mistake since you
wonít have enough left to develop new franchises.
- Recognize that with few exceptions, itís difficult to sell
that first franchise.
- Donít equate the high cost franchise consultant with
quality. There are a number of very effective and knowledgeable
franchise consultants that charge a reasonable fee to franchise
- Start out with the tools needed to start your franchise
program. Unless you have unlimited capital, avoid spending money
on high priced slick franchise marketing literature and other
- Whenever possible, make sure you have advice from people who
have actually operated and developed a franchise system.
Business owners who are considering franchising their business should
recognize that launching a new franchise can be a formidable task. Although,
some new franchises get off to a fast start this is the exception not the rule.
Be sure to temper expectations and spend your capital wisely.
© 2012 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He
can be reached at firstname.lastname@example.org