Last week, one of my facebook friends show his friend shop that gonna shut down. His friend have a franchise business but can’t survive. Many of us thing franchise carries less risk than starting a business from scratch but that’s wrong. It could fail if you not properly by either the franchisee or the franchisor.
Many franchises failed because of this :-
1) No systems in place
– Using franchising the system need to be strong. It is important because if the business has no systems, or relies upon the skills o individuals, then it cannot be franchised.
A good franchise business has everything documented and systemised so that they can pass it on to other individuals to follow and be as successful as them. Most franchisors do not require franchisees to have experience in their industry as they will be trained in how to follow the systems.
2) No track record
– We have been approached a lot at exhibitions or seminar by people who have an idea for a business that called a franchise. Do he/she really have the good franchise or just want to make money? A business need to be running successfully before it can be franchised. Make sure that your franchisor has a good track record of running a successful business.
Francises need to have good record before being franchised. A good franchisor will have run a pilot franchise to make sure that the business can be franchised and to help iron out issues that may arise before it is rolled out as a franchise.
3) Location, location, location
– Getting the location right is important to buying a business. Your franchisor needs to be able to get you premises in a popular area. Being in a prime location is key factor in being successful. A good franchisor will spend time finding the right location for you.
4) Lack of marketing
– An established, well-known franchisor will undertake national marketing to continue to promote the brand throughout Australia as well as some local marketing to create awareness in your area for your franchise. Smaller franchises require more marketing as they are not as well-known and so the franchisor should have a marketing plan in place to help promote and gain recognition nationally as well as locally. If a franchisor has not got a marketing fund, then they will struggle to promote the business and win customers.
Without any brand presence, the franchisee will just become like an independent and not benefit from being part of a franchise network. Franchisors should contribute some of the money the get from selling a franchise to a shared marketing fund. A good franchisor would see the long term benefits of doing this, a bad franchisor that is just out to make as much money as possible in the quickest time, will not want to invest their money in this.
That’s some point on why franchise failed. Honestly, I like to join franchise in the future but still on catching about this.
Source :- CliveJones