6 Reasons Why Franchise Fails

If you want your business to grow or have realized you are risking business failure, franchising can save the day. Franchising, especially for small businesses, help to lower the risk of failure by taking advantage of the input of the franchisee, their resources, and community. However, it does not mean that all franchises succeed. Some fail, and the blame is mostly on the franchiser. However, both the franchiser and the franchisee have to blame at some point. Franchisers mostly use franchise growth and KPI tracking software to measure the impact of the franchise. Here are reasons why franchises fail.

  • Poor Business Model

In many cases, a franchisee fails due to poor business modeling. An underdeveloped plan is mostly linked to small or new businesses, and this is one crucial factor that franchisees must consider before joining a business. The poor model can also happen in developed businesses when an organization is unable to keep pace with the changes in the industry and the market. A business must have an established model that can be simulated by the franchises. Lack of that leads to failure.

  • Poor Marketing

If a business has a well-established marketing strategy, it is able to pass it to the franchisees. In short, the business already has its own set of customers and its specific way of advertising that the franchisees should use. If the business lacks an effective marketing strategy the problem is likely to be passed to the franchisees.

  • Lack of Training and Support

Many small and new businesses do not offer proper support and training to franchisees, and this is always a big problem when it comes to performance. It is crucial for businesses to offer adequate training to the franchises to ensure success. On the other hand, franchisees can protect themselves from lack of support and training from the parent business by understanding the industry and the nature of the business before joining.

  • High Competition

There are millions of franchising businesses in the world and this means the competition level is high. If you are starting a franchise in an already saturated market, it means you will deal with stiff competition, some from already-established businesses. You will, therefore, require to look for something popular in the market but still has unexploited opportunities.

  • High Expectations

If you don’t want to deal with unrealistic expectations, it is vital to work with your business plan. The business plan needs to dictate your mission and what you expect to achieve within a specific period. However, you should also know how to deal with expectations from training, business flexibility, and support.

  • Inadequate Planning

Failing to plan is simply planning to fail. Unfortunately, many franchising businesses lack proper panning. It is vital to ensure adequate planning before indulging in franchising, considering that there is a lot involved. The plan acts as the map that shows where the franchise should go and how far it has gone.

Final Thoughts!

Failure in franchising happens on both sides. The franchisor and the franchisee play a role in the failure. These are the main, but not the only, reasons why a franchisee fails. Businesses and franchisees must plan well before executing the venture to avoid issues of failure in the long run.


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