Wednesday, March 28, 2012

Mistakes To Avoid When Owning A Franchise

On many levels a franchise business can be considered a “turnkey” type of business. In other words, a lot of the important work has already been done in terms of establishing a brand and providing for quality assurance of selling a product or service. However, just because you are investing into a franchise doesn’t mean you’re guaranteed 100% success. To optimize your return on your franchise investment be aware of these common mistakes and try to avoid them at all costs:

1)      Not Reading the Fine Print:

A common mistake is when a new franchise owner doesn’t understand or even has knowledge about their responsibilities to the franchise and may learn the hard way. Before you sign on to any franchise business, understand that there has already been a team of lawyers who have gone through every detail pertaining to that business, protecting the interests of the parent company. They have outlined every step including your role as a franchise owner. There should be no doubt about what you’re buying into. Remember, it’s all spelled out in the contract - that’s why not only should you read the fine print but you should also go over every line of the contract with a qualified attorney.

2)      Not Talking With Current Franchise Owners:

Buying into a franchise means you are buying into a network of like-minded business owners. These are the perfect resources you should tap into as you get your business up and running. You’re all on the same team and it stands to reason that the success of one franchise is good for all the franchises. You’re sure to have many questions to ask but make sure you go beyond the potential franchise owner you might be buying from. Seek out other owners in your community to assess their experiences with operating the business and their relationship with the parent company.

3)      Not Having the Right Amount of Capital:

Any type of franchise business is a serious investment that goes beyond the initial purchase price. You also need to have enough capitol on hand to cover the pre-opening costs and other business budget items. Just as you need to have a cushion of several months worth of savings set aside for your family, you should also have enough capital on hand to insure you can survive any potential lean times with your new business.

4)      Not Researching the Neighborhood:

Suppose you are looking to invest in a franchise business selling hamburgers. You’ve got a great location and plenty of parking but what if the majority of your neighbors are vegetarians? That probably won’t happen but you can see by that example how important it is to research the community you’re going into with your franchise. You might have a robust business during the week but will be hard pressed for customers on a Sunday. You could also find out that there is a late-night crowd on the weekends which can provide a boost to the business. It all comes down to a question of doing the right research.

5)      Not Working With the Parent Company:

As a franchise owner you’ll have access to all information and benefits provided by the parent company. While it is true that the day-to-day operation will fall on your shoulders, that doesn’t mean you can’t tap into your field reps for help. Take full advantage of those company representatives; that’s what they are there for!


  1. Thank you for this article. It very helpful. Now I know how to avoid mistake from this. Thanks again :)

  2. Awesome, I had read the whole article and liked every information which you have been shared about mistakes to avoid when owning a franchise. It can be very useful to people.

    owning a franchise


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