The continuously growing franchising universe is becoming a playground for many franchisors and franchisees. India specifically is witnessing abundant franchise emerging which is being greeted by the local population. The franchising industry is growing with the drastic rate of 30% per annum has touched the annual growth recording a market size of almost USD 7.4 billion. In fact, it’s now the second fastest growing industry worldwide.
Merely being a part of a franchise doesn’t offer financial success. There are many blockades which need to be crossed in order to establish an efficacious franchise.
When people want to start their peculiar business, franchising is a tempting opportunity. It offers many of the perks of entrepreneurship, plus the safety net of operating a business based on recognized concepts and systems. However, too many forthcoming franchisees start to think of buying into a franchise as an assurance of success.
Franchising culture is significant to the success of a franchise system and each franchise within that system. There is an immense risk of losing the culture and vision when one franchise system amalgamates with another. Sharing back-office resources could mean fewer support for franchisees, or dilution of what makes the franchise brand and the franchise system different and gives it its competitive superiority. Collision the culture with an inappropriate merger and one will end up in demolishing the franchise.
Each system has a philosophy of its own. Meet with the franchisor and meet or talk to several franchisees to see how one will fit in. Some franchisors now offer inferior royalties as one gain practice and nurture the business, minimal renewal fees and other features to demonstrate their commitment to one’s accomplishment.
Franchise companies have an established business model and system for franchisees to trail. However, it’s important to remember that owning a franchise can be just as dicey as owning any other small business. Experience of many franchise experts conveys the biggest mistakes people generally commit when starting a franchise.
On its face, opening a franchise may seem like a meek way to run your own business. But beware, rarely is business simple and in the franchise world the business is never truly yours
Tougher times mean franchisors have to be healthier operators to make money and grow. And it is more imperative than ever that franchise chains don’t make blunders. Mistakes in franchising can lead to a disharmony within the franchise system, disputes, forfeiture of reputation, and occupational failure.
Consider evading these common mistakes committed by both franchisor and franchisee which are mentioned below:
1. Usual Franchisee Follies
Marketing and hiring are usually two segments where most franchisee commits a fault. Franchisees need to understand the importance of marketing as it generates thrust during the franchise growth, attracting customers. It also helps in building an optimistic reputation of a brand.
Meanwhile, investing in the right team members aids to achieve an intensive flawless customer service, which people consider a priority in today’s time. So, concentrate on the recruitment process as it would govern the path franchise is going to pave over.
2. Failing to put heart and soul into the business
It's a chestnut, but you have to be "in it to win it." When selecting a franchise brand, consider the influence it will have on other areas of your life. Does it imitate one’s passion? What is the time edge for the investment? Put in due diligence by number crunching and investigating scalability. Afterwards, ask oneself whether the endeavour is still a striking proposition. And before jumping in, also gauge hesitancy. If one doesn’t believe this is the best decision right now, the commitment will fade, and success will dwindle. Of course, even if one is 100 per cent sure, always develop an exit strategy. Also, when picking a franchise don't forget to consider work/life balance. Investing with passion will keep one enthusiastic through tough times. Working hard on something one enjoys will feel like a leeway of one’s personal life, rather than a disparager.
3. Bigger is Better but not always
It’s significant to learn that not always the most popular and bigger brands make excellent franchise opportunities. It is vital that one must do homework, research about the fame of service or product, the owner and his or her credentials, what is the media talking about the franchisor, is there a vigorous support and training structure in place etc.
4. Franchisor always know more than franchisees
One could be a great businessperson but remember that franchising is a completely different model. The franchisor will always know more about the business than a franchise. Eliminating ego and heeding their advice can help the franchise to achieve the business vision effortlessly.
So, when starting, consider keeping things simple and rely deeply on the established business model. Once feel assured to outperform the franchisor model, and then only work on idea turning into concrete.
5. Fading to consult adequately before launching a new initiative
It is a big mistake to initiating and publicizing changes to franchisees without consulting them. This doesn’t mean all big decisions need to be made by concurrence, but franchisors should always seek advice from franchisees on strategic changes for the franchise system.
If franchisors do not get the opportunity to bounce their feedback before a plan is implemented, they are likely to feel angry and indignant even if the plan is a good idea. They feel they should have had imputed; they sense it is disrespectful.
Franchisors often ponder silence from franchisees when a plan is announced is agreement, but it could be they are in a shudder. Then later will get a repercussion of resistance that catches them unawares.
Finding out the strengths and weaknesses of a particular strategy beforehand rolling it out. Getting people into small groups and having a conversation. This way it stays controlled, and one doesn’t have loud people dominating. People can clarify their discerning. Unsurpassed communication is face-to-face.
But beware, it’s also a mistake to listen too much to the flamboyant people in the franchise network and undertake they are speaking for the group. An upright way around that is to do surveys so the quiet mainstream has a say.
6. Keeping a track record of Revenues is a good thing
Tracking is an important element to know what you are investing and earning. Usually, franchisees nosedive in keeping the track of revenues, which lead to their failure. Quickly set up financial setup which can test the model’s practicality.
Remember that tracking revenue and expenses properly can aid to detect the amount of money which is coming in and going out.
Therefore, operating a franchise is an opportunity to follow one’s passion. If one is passionate enough without having an ego on board, congratulations you are acceptable for the franchising industry!
Conclusion
Although most franchises are considered as recognized businesses, buying one doesn’t disregard all the risk of starting and running a small business. Learning from other people’s experience and mistakes will help lessen these perils. If one is planning on starting a franchise, make sure to evade the above common mistakes franchise buyers often make.
Some franchisors point out how bulky an industry segment they discourse. While it’s generally important that one is addressing a mounting market, this alone will not make flourish. The franchisor’s training, marketing strategy, site selection, how one instrument their plan and many other factors will be more significant to success than just the magnitude and growth trend of the industry served.
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