When people open a franchise, they tend to picture everything that could go right. The thought of financial independence, business growth, and being your own boss certainly has its appeal. That said, not every franchise is successful. In this blog post, we will look at some reasons why they fail.
- Lack of business skills – In this guide from AllBusiness, it’s explained that franchisees often place more reliance on a proven system as opposed to their own competence and business skills. Let’s say, for example, that marketing is a critical aspect of your franchise. In turn, it’s imperative that you have some working knowledge of marketing. If you don’t, be sure to hire someone who does.
- Underestimating the commitment – It’s up to you how much you put into your business. Some franchisees elect to be involved in every detail while others choose to be hands-off. In either case, just know that you must be committed to the business. Be prepared to work harder than you have in the past. Before you’re ready to hand off daily operations to a management team, it’s a good idea to be a major cog in the day-to-day operations.
- Incompetent staff – The majority of franchises rely on part-time or seasonal staff to run the business. Training employees in operational duties is a must, but there’s much more to your team’s happiness than that. Keep in mind that those who fail to create a team that cares about the success/failure of the operation can be extremely detrimental.
- Poor location – This falls more on the franchisor than the franchisee. It’s ultimately up to the franchisor to identify and negotiate the ideal site for the franchisee. Should your business be stuck in the wrong location, the opportunity for success becomes minimal.
- Expensive rent – Remember that rent is the largest fixed cost in any business. AllBusiness mentions that a new franchisee usually enters into a lease arrangement that’s too expensive. If you find that the rent is nine percent of sales or greater, you’re likely setting the business up for failure. Overall, successful franchises rent at or below seven percent of sales.
- It’s an emotional decision – We’ve said this before, but it’s worth repeating. As a franchisee, you don’t necessarily have to be an industry expert to succeed. Let’s look at landscaping as an example. You may love nothing more than mowing the lawn on Saturdays and tending the garden. But just because it’s a passion doesn’t mean you’re guaranteed to have success in the business world with it. Take some time to understand the practical components of owning and operating a business. Who knows? Maybe you’ll wind up opening a mobile pet grooming service because of the consumer need and lack of competition.
- Inability to compete with non-franchise competitors – Before signing on the dotted line, you should know the percentage of revenues that goes to the franchisor. This may consist of advertising fees, office support, product purchase requirements, etc. In the back of your mind, know that some competitors out there won’t have these same fees. Why would you invest in a franchise if you can’t compete with others in the industry?
- Minimal support from franchisor – Whether your desired franchise is big or small, support from corporate is a must. A well-run franchisor is backed by franchisees and vise versa. As a refresher, a franchisee pays an ongoing royalty to a franchisor for ongoing support. Should the franchisor not set up the franchisee with what they need, the chance for success is limited.
A Glance at Profitable Franchises
What separates profitable franchises from ones that are barely getting by? For one, it starts at the top. The best franchises and business opportunities for sale should be committed to being a leader in innovation. That’s exactly what the Rebounderz franchise is all about. For the last decade, Rebounderz has grown to be the family entertainment franchise leader. How is Rebounderz one of the best franchise investments today? It starts and ends with our indoor family entertainment centers, family adventure parks, and extreme fun centers. Rebounderz features a patented trampoline combination & Dodgeball Jumpers, custom Ninja Warrior Courses, Basketball Slam, and much more.
The Rebounderz franchise can be easily implemented anywhere in the U.S. or internationally! Learn about our growth opportunities today.