Common Mistakes to Avoid as a New Franchisee

Introduction

You’ve decided to join a franchise, what could possibly go wrong? As a new franchise owner, you will of course have the support of a company with a proven business model but, as with everything, there will be a learning curve as you settle in to your new career and role.

Mistakes happen, that’s why they put rubbers on the end of pencils! In this article we have compiled a list of 5 common mistakes that can be made so that you can avoid them when starting out as a franchisee.

Failing with Finances

First of all, you are going to require some financing to fund your new business venture. Franchisees generally use loans to cover the franchise fee and any upfront costs, but when you are looking into loans you need to ensure you choose a favourable one. Look out for a short repayment period or high interest rates, as these options will have an impact on your business. Make sure you are choosing one with the best long term financing option for you!

Not Sticking to The Franchisor’s Rules

Franchises come with clear rules, systems and processes all in place for new franchisees to follow to ensure consistency and quality within the company. The franchisor has a proven business model that when adhered to will guarantee success, if you stray from the franchisor’s guidance and make unnecessary errors then your franchise can negatively impact the overall company brand. Only people who are able to follow rules should consider investing in a franchise.

Assuming Success Will Come Easily

Just because the franchisor and their franchisees are successful does not mean that your location will be a success over night without any effort from you. You will need to find your own clients, treat them well to keep them and then build your client base. Do not assume that as it is a franchise business that it markets itself, it doesn’t, as with any type of business you will need to conduct marketing campaigns for your own territory.

Lack of Research

You should never settle for the first option when selecting a franchise for investment. You should always compare your options from the cost, support provided by the franchisor and the competition. You also can’t always take the franchisor’s claims at face value. Use the internet to thoroughly research the brand, their locations and look through online reviews.

Not Examining the Franchise Agreement Carefully Before Signing

Being a first-time franchisee means you need to know your franchise agreement inside out and exactly what could breach your franchise agreement resulting in your franchisor terminating your contract. If you are unsure of your obligations, you can seek expert advise from a franchise solicitor who will simplify the document for you as they can often be lengthy and quite complicated.

Conclusion

These are all easily avoidable mistakes. Be honest with yourself with what you are able to put into the investment and make sure you have thoroughly investigated and research your prospects before signing on the dotted line. Go into the venture with an open mind and realistic expectations, avoid these blunders and enjoy your new role!

We also have some useful tips for the first-time franchisee, take a look at our previous post - Helpful Tips For New Franchisees