We have helped many franchisees own a franchise in our years as consultants. We have also seen the same mistakes repeatedly (we even made a few as franchisees). And while none of these mistakes will spell the outright failure for a franchisee, making any of them will make running your business harder... and less profitable.
The advantage of working with a consultant, especially those with hands-on franchising experience like us, is that we will deliver some of this information in our coaching calls. We want you to be successful as much as you do. This article will lay out some quick advice to help make sure you succeed.
New Franchisee Mistake #1: Not Following the Franchise System
You don't need to reinvent the wheel. As a franchisee, you are paying for the franchisor's products: use them. Getting caught up in marketing or building processes means you are taking your eye off of growth. Focus on the profit area (sales, sales, sales) and use the already available tools.
The advantage to becoming a franchisee is the system, which consists of the processes and procedures. Remember, you don't know better than the system. The franchisor has done the (tough) work. You may have run a business before, but you haven't run THIS business.
Franchising is an implementation game. If it's important to you that your business is a creative outlet, franchising might not be the best for you. Not following the system is the easiest way for a new franchisee to get into trouble.
New Franchisee Mistake #2: Not Leveraging the Franchisor and Other Franchisees
Franchisors take a royalty off your profit. They want you to succeed because when you succeed, they succeed. Make sure you use them.
If you are having issues, make sure to ask for help. They won't know you are struggling. Most franchisors provide a great support system. They have likely experienced every issue and setback and overcome it. Lean on them when you need help.
As a franchisee, you are part of an extensive network of other franchisees. You can contact other owners and ask what they are doing to improve their site and then apply it to yours. Unlike businesses that compete against each other, territories define franchises, so no other owners are your competition. If every location is fantastic, it will only help the brand grow.
New Franchisee Mistake #3: Not Hiring the Right Key Employees
Don't cheap out on personnel! When you hire the $36k person over the $50k person, you might spend more time replacing and onboarding them than growing. It is stressful to hire new people. Do it once instead of three times.
We also suggest using personality assessments when hiring key employees. Make sure everyone compliments each other and fills the gaps of knowledge, ability, and experience. There are many options out there, and they are all different. Experiment and try different ones to see which provides the best result for you.
Keep in mind you are building something. You are leaving the corporate world to make something your own. Fill it with people you want to be around. Enjoy your business and build a team you love.
New Franchisee Mistake #4: Not Leading/Minding the Business
You have to lead your team after you hire the best people. Don't get stuck in the day-to-day. Delegate! Many business owners struggle with delegation, but doing so will free you up to build the business.
Growing the business should be your primary focus, and if you are stuck in the minutiae, you will stall. You will also work way more than you need to. The system will provide much help in team management, but ultimately it is up to the franchisee to follow the plan.
New Franchisee Mistake #5: Working "In" the Business, Instead of "On" the Business
When you invest in a house painting company, if you are out in the field painting houses every day, you are probably doing it wrong because you are working in the business. Learn what the job is, then pay someone else to do it. You need to build the book of business, not collect trash on a truck or clean houses. You should be working on the business.
Your investment in a franchise is just that: an investment. If you are providing the service, you paid a lot of money for another job. Use your business expertise where it will bring the highest return.
New Franchisee Mistake #6: Growing Before You are Ready
Don't buy things you don't need or hire people that don't have enough work. Growth is fantastic, but false growth is dangerous. Ego-based growth is even worse. Only expand when it is warranted and follow the franchisor's advice—only layout capital expenditures when you can put them to good use.
New Franchisee Mistake #7: Not Spending Enough Money to Launch
If no one knows you are there, no one will show up. You need to plan and use a budget for your launch. Don't skimp on the marketing budget!
Being a hyperlocal business means you need to get customers through the door at the beginning to spread word of mouth. Referrals are huge for individual franchise locations.
You can spend money and have it be slow and painful or fast and painful. Rip off the bandaid and get to profitability with good marketing.
New Franchisee Mistake #8: Not Having Enough Working Capital
If you run out of capital, you are done. Plain and simple. Capital is the life-blood of any business. As a rule of thumb, it will take twice as long and cost twice as much as you think it will to build your franchise. Account for that when deciding which business to invest in and how much to take out in loans.
Extra capital allows you to be flexible. Getting tight on money makes everything harder.
New Franchisee Mistake #9: Not engaging the community
You want people to use your business as a business owner; therefore, you should use theirs. Shop local and build a relationship with other local merchants. When you support them, they will support you. When you recommend them, they will recommend you.
Be part of non-profits and other community organizations to build a more extensive network of supporters. It is smart to be part of the Chamber of Commerce or Rotary. You can also use profits to donate to local charities or sponsor Little League teams.
Embed yourself into your area. Franchising is hyper-local since you are limited to a service area. When you invest locally, the local community will invest in you.
As you invest, grow, and build your franchise, make sure to monitor yourself. If you see yourself making any of these mistakes, try to fix them as quickly as possible. Your success and financial freedom depend on how your lead and manage your franchise investment.
Are you ready to become a franchisee and own a franchise? Reach out to HIRE YOURSELF for a free consultation.
