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Common Mistakes of New Franchisors
Posted on November 16, 2010 by My Franchise Law

When starting your own franchise business there are many different areas to cover in order to make your new endeavor a success. Unfortunately, with so much to focus on, some important details can get lost in the mix, causing unnecessary complications on top of the built-in challenges of expanding your new business. Here are a few key mistakes to avoid, to ensure a smooth transition into the franchising world.

  1. Have all the info; you never want to be caught off guard when meeting with potential franchisee. Go above and beyond the required disclosures, showing them concrete numbers and backgrounders, to show your willingness to be completely transparent with your operation.

  2. Build strong ties; some franchisors make the mistake of falling into an employer-employee relationship with their franchisees, which can lead to conflict and a strained working relationship. Focus on communication, addressing any questions or concerns from franchisees with diplomacy and tact, and avoid making your requirements sound like orders from a commander.

  3. Set proper franchise fees: There are some franchisors who may think that by setting their franchise fees at a lower rate they will attract more interest from buyers. Unfortunately, if you are not properly funded, you will not be able to support your franchisees to the best of your ability which can lead to frustration and poor franchise business performance down the line.

  4. Monitor growth: Some franchisors can run into problems by expanding too quickly, and thus struggling to properly support their current franchisees. Without the correct training and guidance from a franchisor, these new businesses may struggle to gain their footing and end up failing before they get off the ground.

  5. Stay involved at all levels: In some cases, franchisors can get caught up in the business end of their franchise, and lose touch with the day-to-day operations of their franchisees. By staying involved – meaning frequent visits, assessments, and customer satisfaction queries – when franchising your business, you will remain in the know about your operation and more likely to recognize areas for growth and improvement.

Remember to keep these things in mind when considering franchising your business. Doing your research and getting all the facts are the best ways to ensure your franchise ownership experience is a positive one.

 

External Resources

Small Business Administration

A government resource for finding information on planning, mentoring, and strategies for franchises and small businesses.
SBA Small Business Planner

USA.gov Business Gateway

Resources for every step in planning your business or non-profit, from getting your EIN to handling wages.  
USA.gov Business Gateway

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