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Franchisee Failures Can Often be a Shared Responsibility

by Ed Teixeira

On the Internet, in blogs and in print media certain reports on franchisee failures may neglect one important factor.

Often times the franchise industry will take on the appearance of our current political system, which most historians would consider to be among the most polarized in recent history. In terms of franchising, there are those who consider numerous franchisors to be greedy and devious. On the flip side some franchisors place the responsibility for a failed franchise solely on the shoulders of the franchisee.

Quite often, the responsibility for failure can be shared. For example, one of the leading causes of franchisee failure is a lack of capital. Who bears the responsibility for this? Is it the franchisor that may not provide accurate and full disclosure or the franchisee who reports more capital in their franchise application than they actually have? If a franchisee candidate includes their family as one source of capital, should the franchisor be expected to interview family members? An intriguing question to ponder.This is not to say that there aren't instances where a poor performing or disreputable franchisor isn't fully responsible for their franchisee failures or that a franchisee that fails to follow the "system" or neglects their franchise doesn't bear the responsibility for his or her failure.

I could certainly make a case for many franchisee failures to be a shared responsibility, such as:

1. A franchisor that in their zeal to grow the franchise system promotes the positive points of the franchise and overlooks some shortcomings on the part of a franchise candidate.

2. The franchisee candidate who is dollar wise and pound foolish that fails to invest some money for qualified legal and financial advice and further, fails to review the wealth of franchise evaluation information available from various sources.

One possible solution to franchisee failure is for a franchisor to make full disclose and to aggressively investigate the qualifications of every franchise candidate. On the franchisee side understand franchising, invest some time to thoroughly investigate their preferred franchise opportunity and utilize qualified legal and financial advice.

Could the shared responsibility for franchisee failure be converted to a shared responsibility for franchisee success? Can it be as easy as it seems?

2015 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow.com and Chief Operating Officer, FranchiseGrade.com. He is a former franchise executive and franchisee. He can be contacted at 631-246-5782 or at  franchiseknowhow@gmail.com



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