What are the Biggest Mistakes New Franchisees Make?

Mistakes New Franchisees Make

Franchise Experts Share Tips on Succeeding in the First Year of Business Ownership

Franchising has become one of the most popular ways to become a business owner. With established brand recognition, a proven business model, plus built-in support and training, the benefits of franchise ownership are undeniable. It’s no wonder that more and more people are choosing to go into business through franchise ownership rather than going it alone. The International Franchise Association’s 2024 Economic Report projects that more than 15,000 franchises will be opened in the U.S. this year, raising the number to 821,000 units.

But as rosy as the picture is for franchising’s future and growth, there is no guarantee of success. Investing in a franchise can be a huge, life-changing decision that should be taken seriously. Prospective franchise owners owe it to themselves to do their due diligence and go into the process with eyes wide open. The truth is that owning a franchise is not for everyone. And even when it is a good fit, it’s not a one-size-fits-all proposition. Each franchise brand is different and offers unique opportunities and challenges. Potential franchisees must thoroughly research and evaluate the specific franchise, its market position, and its fit with their own skills and lifestyle before committing to franchise ownership.

Success in Franchising

Ultimately, success in franchising requires commitment, hard work, and a willingness to follow the franchisor’s proven system while still being able to adapt and pivot as needed. Those who approach franchising with a clear understanding of the challenges and a have solid plan for addressing them are the ones who tend to thrive.

If you’re looking to start a franchise business, it’s crucial to know the common pitfalls and take advantage of expert advice. We’ve gathered tips from franchise experts who share the key mistakes franchisees make and offer essential strategies for success. Their advice covers everything from financial readiness and the importance of strategic partnerships to staying focused on what drives business growth. Let’s explore their valuable insights.

Mistakes New Franchisees Make
Top row, from left to right: Ralph Yarusso, Melissa Salyer, Chip Baranowski, Kendall Ware
Bottom row, from left to right: Dr. John Hayes, Ian Laskowski, Aaron Harper

Ralph Yarusso, Atticus Franchise Consulting

“The biggest mistakes new franchisees make are being undercapitalized and not utilizing professional services (such as attorneys and accountants) to help them in the business planning process. They should always work with franchise consultants for good direction to establish their business and ensure they have all the tools in place to be successful.” —Ralph Yarusso

Melissa Salyer, First Choice Business Brokers 

“New franchisees often underestimate the expenses of starting a franchise and miss the importance of marketing it.” —Melissa Salyer

Chip Baranowski, Green Home Solutions

“New franchisees often don’t do their research, don’t follow the system, and buy into a franchise undercapitalized.” —Chip Baranowski

Kendall Ware, Walk-On’s Sports Bistreaux

“The top three most common mistakes I’ve seen new franchisees make are: 1. Overlooking their ‘why’ and whether the franchise brand aligns with it. 2. Not securing enough capital for ongoing operations post-opening. (Most secure capital for three months, but six months is more realistic.) 3. Focusing too early on labor and food costs, before truly building a strong foundation of people and providing enough training to consistently deliver your brand experience.” —Kendall Ware

Dr. John Hayes, Titus Center for Franchising at Palm Beach Atlantic University

“New franchisees (and even new franchisors) make the mistake of not mastering business professionalism. They depend on the franchise system to do it all! They think they bought a turnkey system that guarantees success. It doesn’t do it all. It doesn’t read the profit and loss statements or hire, manage and fire employees, etc. Those lacking business skills are more likely to fail.” —Dr. John Hayes

Ian Laskowski, Morrow Hill

“One of the biggest mistakes a new franchisee can make is failing to partner with the proper vendors to support their new endeavor. These partners should be experts in their respective fields and will provide the direction essential for long-term success and growth.” —Ian Laskowski

Aaron Harper, Rolling Suds

“The biggest mistakes I see new franchisees make are: 1) Trying to innovate before they’ve imitated. This means that they challenge or question the system before they fully understand it. While this gives them a perceived sense of control over their business, in reality the systems are what they have paid so much money for. 2) A general lack of focus on what drives the business forward the most. I see so many franchisees focus on the color of the brochure instead of engaging in their community to drive revenue. It’s wild. My recommendation for anyone who is deciding to buy into a franchise is to focus diligently on following the system they paid for.” —Aaron Harper

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Jill Abrahamsen’s career spans more than 25 years in editorial, design, and marketing roles. As the editorial director of IFPG, she serves as editor-in-chief of Franchise Consultant Magazine and FranchiseWire. Through both platforms, Jill helps franchisors spread the word about their brands and reports on the latest franchise news and trends. A skilled storyteller, Jill communicates franchisor’s messages through feature articles and franchisee interviews.

Jill is an accomplished writer, editor and graphic designer. Her extensive experience includes key roles with major consumer publications, including Boating, Popular Photography, and Design NJ magazines. As founding editor-in-chief of Franchise Dictionary magazine, Jill developed her passion and fascination for franchising which continues to grow in her role at IFPG.
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