Running a franchise can be easier than starting your own business from scratch, but franchises are not immune to challenges. If you are thinking of buying a franchise, there are certain mistakes that you must know about as early as now to avoid committing them in the future:
1. Thinking that you will have full control
When you buy a franchise, the control that you have over the business is limited. So if you, for example, plan to invest in hydraulic franchise opportunities, the first mistake you must avoid is thinking that you have full control of the reins. You will be the boss of the store, essentially, but the franchisor will be the one to call most of the shots. If this is something you are not comfortable with, franchising might not be the right path for you.
2. Not talking to existing franchisees
Connecting with existing franchisees can help you gain valuable insight into what the business or industry is like. Moreover, interviewing them will give you more honest answers than when speaking to the franchisor or any sales representative they might have.
You can also use their responses as a basis for your decision whether to push through with the franchise or not. If they show reluctance to share information or have more negative than positive things to say about the business, treat it as a red flag.
3. Falling for shiny rewards and rankings
Franchises love to display rewards, rankings, and press clippings on their website because it helps establish credibility. However, you must not use these embellishments as a basis for your decision. These rewards, rankings, and press clippings might not reflect the quality of their franchise program and instead be mere PR.
4. Underestimating expenses
Apart from the franchising fee itself, many hidden expenses come with buying a franchise. When dealing with a potential franchisor, ask for a complete breakdown of the franchise costs, not just the franchise fee itself. This breakdown should include overhead fees, taxes, working capital, and other potential charges.
Even when you have the total costs of the franchise, it’s best to allow for unexpected expenses in your budget. The last thing you want is for your launch to be delayed because of a lack of funds, so it’s better to overestimate the costs than underestimate them.
5. Expecting instant success
Even if the franchise is an established brand with impressive revenue, there is no guarantee that your franchise will be an instant success or will even be a success at all. There are no guarantees when it comes to business. And if you expect to reach your goals immediately, you might be in for a reality check sooner or later.
It’s okay to want the best for your business, but it’s also vital that you remain realistic. Remain level-headed before signing up for a franchise. If you expect too much too soon, you are only setting yourself up for disappointment.
6. Inadequate research
When looking for the right franchise, adequate research is essential to make the best decisions. If you fail to conduct enough research about the industry, the franchisor, and the franchise business model itself, you might find yourself making even more mistakes down the road. In a worst-case scenario, your business might fail before it even gains traction.
Find out everything you can about the franchisor and the industry you want to enter. Check the company’s track record and find out more about its history. Research the industry and get an expert’s opinion if need be. If you are unsure about entering a business that you know next to nothing about, it can be better to wait until you’ve gained enough knowledge and experience.
7. Expecting the franchisor to do all the work
Although the franchisor is the one holding the reins, they won’t do everything for you. Don’t expect the business to run with minimal effort on your part. If you buy a franchise and fail to pay enough attention to it, you put the company at risk for underperformance or utter failure.
Buying a franchise is a long and complicated process. Fortunately, knowing these mistakes can help you protect your money from bad investments. But if you feel that being a franchisee is not the right fit for you, consider starting an independent business.
Do you have more advice to share for aspiring franchisees? Tell us all about it in the comments below.