5 Reasons Why Startup Franchises Can Fail, and What to Do About It

Griffiths University reported that the overall number of franchises fell between 2012 and 2014, because of small and unprofitable franchise closures.

But franchise groups start small (even McDonalds) and some choose to stay small. 5


1. A franchise is more than Legal Agreements and Operations Manuals.

Don’t draft the legal agreement and operation manuals before you work out how your franchise will work. Get the franchise business structure right based on both your franchisee and franchisor businesses, then you will know what to put in the agreement.

2. Take care with the product and the location

Knowing the demographic characteristics of your tribe and exactly what they desire is important. This will be the foundation for marketing and franchise territories.

3. Think carefully about ongoing fees to support your franchise outlets, especially for the long term

In the longer term, as all your territories fill, the one-off initial income will reduce and the on-going frees will be essential cover your part of the deal.

4. Think about support and marketing

One of the most profound sayings from Greg Nathan, Principal of Franchise Relationships, is “Happy franchisees are profitable franchisees. Your franchisees bring in the money for both sides of the franchise in return for your services, so take care of your part of the agreement.”

5. Don’t hire the first person with the money to invest

Take on the right franchisee. One wrong franchisee can impact on the morale of the group.

Article Source: savvysme.com

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