Seven Franchise Mistakes to Avoid As a New Franchisee

Franchising a business may seem like the best course of action for new entrepreneurs. After all, franchises have a proven business model. Plus, it seems like nothing can go wrong when you buy a franchise. But franchise mistakes can happen. And they are unavoidable. Here are seven franchising mistakes you might commit and how to avoid them.

1. Not Conducting Adequate Research

Before saying yes to any franchisor, it’s essential to research your franchise selections. One of the many franchise mistakes to commit is not knowing what you’re in for before buying a franchise. For example, you’re keen on franchising a big brand. However, just because a big brand works for a franchisee doesn’t mean it would work for you. 

Researching will help you understand how to operate and fund the franchise. Plus, research also entails that you talk to existing franchisees before committing to a new franchise. This allows you to know the state of the franchise and how franchisees are talking about the brand.

2. Not Consulting a Lawyer

A Franchise Disclosure Document (FDD) can be challenging to read, especially if you don’t have a legal background.  The FDD contains legal jargon; you will need a lawyer before buying a franchise. 

You don’t want to get into trouble in the future because you didn’t understand a specific point in the FDD. That’s why a lawyer should be with you from Day 1. They can guide you on how to operate the business properly. Plus, if you get into legal trouble, they can help you immediately.

3. Not Preparing Your Finances

Franchisors will present an estimate of their franchise fees. But it doesn’t mean that’s EVERYTHING you have to pay during the first few years of your contract. Remember, they’re presenting you the initial fees when they send you the FDD. That said, you should be prepared to spend on unforeseen circumstances and other fees that may incur.

In case you’re low on cash, you can ask the franchisor for help with funding. Or, you can research various funding options to get started with your financing.

Aside from your lawyer, two other key players in your team are bookkeepers and accountants. Before you buy a franchise, you can consult them with them if needed.

4. Not Participating in Conferences and Conducting Training

Franchisors conduct seminars and conferences, but some of them don’t mandate franchisees to attend their conferences. However, as a franchisee, you should try to attend your conferences. These seminars or conferences are key to getting you updated on the latest business practices and tech. Plus, you get to know more franchisees and build a bigger network.

Other than going to conferences, another franchise mistake you can make is not regularly training your employees. If the franchisor has a training seminar for all employees, why not include one senior management to tag along? Or if you want to train the whole team, you can have a training seminar for everyone during office hours or on weekends.

5. Not Being a Team Player

You need to understand that franchising is a system, and you’re part of a team. It’s important to follow what the franchisor is doing. As a franchisee, you might be tempted to move forward by yourself once you buy the franchise. However, you have to honor your agreement with your franchisor.

Aside from that, it’s important that you keep in touch with your fellow franchisees too. If you build a solid franchise network, you can exchange resources and information to help each other succeed.

6. Not Talking and Communicating with Your Franchisor

Once you buy a franchise, it doesn’t mean all communications with the franchisor are done after launching it. In fact, one of the many franchise mistakes you can commit is not talking to your franchisor about your needs. If you have questions about running the franchise or guidance about your employees, the franchisor can most certainly entertain questions about these concerns.

Plus, if you have complaints or suggestions, your franchisor should also know. For example, with complaints, you can tell them about the issues you’re encountering. Additionally, with suggestions, the franchisor can consider it and see you as an innovator or team player.

7. Not Sticking To A Plan

There’s a reason a franchisor is asking for a business plan before you buy a franchise. It’s to show that you have a long-term plan in place. Plus, you can show your franchise business plan to the bank and help you secure funding. One franchise mistake you can make is not sticking to the plan that your franchisor agreed upon, and you don’t stick to the plan. You want to make sure that you honor your franchise business plan to ensure smoother and more efficient operations.