Business Mentor: Common challenges in the franchising business

Armando Bartolome

Posted at Oct 01 2022 10:13 AM

Some entrepreneurs dream of owning a successful franchise business as it allows them to focus more on building the brand with the help of the franchisees. However, the industry has become more competitive, so creating a unique and lucrative brand has become more complicated. These challenges faced by franchisors can become a burden to franchisees if solutions are not found.

Established brands continue to enjoy their success as people are more inclined to put their trust in them. As these aspiring franchisees see it, the risk may be greater in betting on a new player in the franchise business scene. That can be true. However, the franchisees' success doesn't always rely on the franchisor. A franchisee may choose a well-established brand, but if he fails to manage the business properly, the franchise business is still likely to collapse.

What are the problems faced by franchisors?
Growing any kind of business has its challenges. Below are some of the most common problems with possible solutions to help you get on the right track.

1. Insufficient capital 

For the business to start, a franchisor needs to have enough money to support incoming franchisees – assistance with operations, marketing, accounting, and other administrative work. 

Seek the assistance of professionals from various fields, such as lawyers, accountants, consultants, brand development experts, and other essential workers who can fully commit and have the same vision as you have. Hiring these professionals entails money, and you should consider taking a loan or seeking investors.

2. Developing infrastructure

There is a need to build a robust infrastructure that includes a system, procedures, standards, and policies which will act as a reference in managing the business. Expect uniformity across all franchisee owners. 

A thorough analysis should be put in place to identify which works and which does not to determine any additional support needed. It would act as a basis set for future franchisees.

3. Select the right franchisees

Franchisors should not be in a hurry in choosing the franchisees for their business. You should not accept everyone knocking on your door and showing interest in investing in your franchise business. Select the people who will carry your brand carefully. 

The chosen franchisees should share the same vision as you and have the right mindset for sustaining a business. Although we all want to earn, the main focus should not be on the money but on the quality of work one needs to put in.

Create a strong relationship with the franchisees so that you can easily reach out to them and advise them about what works out and what doesn't. The franchisor-franchisee relationship does not end after signing the franchise agreement. It is just the start. Both of you need to work together to make the brand more robust and better.

4. Transitioning from an ordinary business owner to a franchisor

A novice entrepreneur looks into the business's products and services to the public. Being a franchisor requires a different skill set, as this would necessitate the franchisor to motivate and inspire the employees to become more hardworking and supportive. 

Franchisors should focus more on building strategies, providing support, and searching for the right people to work for the brand.

5. Lack of support

As franchisees increase, there will be a higher demand for the support each franchisee may need, particularly in helping out with the system. Being short-staffed can likely lead to a delay in the order of products by franchisees, or the system may fail. If this happens, a franchisee may feel disappointed to the point of being enraged, mainly if there is an enormous demand for products.

As a franchisor, you need to provide the best solution for all franchisees, especially with the system that every franchisee needs. Hence, choosing the best software developer is essential to ensure there will be less downtime in the system. Your vision should cover a large number of franchisees using the system. That is why it is essential to check on how the system works with the first franchisee to identify which part of the system needs more improvement and determine its capacity if it can carry the load of having to serve multiple users.

Unfortunately, even if you think franchising your business is your key to making more money, you still need to put your effort and time into making your dream a reality. It is always tricky at first. Once you have started and slowly identified what needs to be improved to ease the business flow, you can relax and devote more time to strategizing for business growth.

For more information, you may contact Armando "Butz" Bartolome 
by email:
FB Page: Butz Bartolome



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