Why do some franchises fail? Often it’s due to the actions of the franchise owner. Here are seven things a franchisee should never do.
Over my years and experience in franchising, I’ve seen it all. I am thrilled when franchisees succeed, but, unfortunately, not every franchisee does. I have come to recognize patterns of mistakes that lead to failure. They are what I call “the seven deadly sins of franchise ownership.” Here’s a look at the most common ways franchisees can fall from grace and how these misdeeds can be prevented.
Never separate from the franchise brand
A franchisee who works against the brand is working against himself. A franchisee should be loyal to the brand and to the collective benefits of working together—that’s the goal. If you lose a positive, constructive attitude, that’s the first sign of trouble. Don’t give up; don’t bash headquarters; don’t talk down about your brand; don’t trash other franchisees; never make it personal.
Never stop communicating with your franchisor
One of the best parts of franchise ownership is having the franchisor’s support and access to a network of franchisees. If you stop sharing ideas and engaging at any meaningful level, you will begin to isolate and drift away. When this is intentional, it’s a huge mistake.
Never experiment with the franchise model
Following a proven system is what franchising is all about. You are paying for the branding, the marketing, and the business model, so why would you change it? The goal for franchise owners is to find how to implement the entire model. Do not experiment; focus on implementing. If you’re having trouble, ask your franchisor and fellow franchisees for help. Do not experiment; that is a cardinal sin.
Never view fellow franchisees as competition
If you view local franchisees from your own brand as a competitor, that’s a disconnect and short-sighted. There is so much opportunity for collaboration and mutual benefit. You should think of fellow franchisees as siblings—or at least cousins. When you think about it, a fellow franchisee is running the exact same business as you. You have a unique opportunity to learn from each other and possibly share resources.
Never do it all yourself
A franchise owner who can’t delegate becomes his own obstacle. By taking everything on yourself, you really limit your earning potential and the growth of your business. Instead of being chained to the counter, you should focus on the big picture. Franchise owners should be business builders. Their time and energy should be spent on sales and leadership, not tinkering as a technician. A good franchisee learns how to grow the business by having quality employees with good training and a plan to scale.
Never get sloppy with numbers
Running a business with complete and accurate financial management and controls is a good risk management strategy, but it’s also fundamental for success. With good numbers, you can make better decisions. With more numbers, you can make more decisions. Having the data and information in a format appropriate and consistent within the brand allows the franchisor to give better feedback and suggestions. Being able to compare your information across the brand with other owners is always helpful. If your financials are a mess, that’s a sign that something needs to be fixed. If it’s garbage in, then it’s garbage out, and garbage is difficult to use for making decisions.
Never get complacent
I’ve seen businesses fail when they really didn’t need to. Sometimes veteran franchisees take their business for granted and fail to plan for long-term growth. The universe of competition never lets up. The solution here is to get good advice from franchisees with peer groups inside the brand, experts inside your brand, other advisors and consultants. Always look for resources to learn new things and expand your ideas and grow as an individual, professional, and business owner.
Bring the good stuff to your business and share it with your brand. Franchising is like economic Darwinism. If you don’t adapt, you will not survive.
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