7 Common Mistakes to Avoid When Franchising

Franchising a business is a massive undertaking. Some mistakes are common, whether you’ve been a franchisor for a long time or you’re just branching out into franchising.

Below, we have examined some of the most common mistakes that we have seen franchisors make across the years. Take a look below for guidance on how to avoid them now.

1. Your Business Model Lacks Definition

An ill-defined business model can be detrimental to a franchise. You should define it so your model is scalable, replicable across locations, and competitive in the market so it has staying power.

To define a business model for your franchise, you must outline the key areas that support success and profitability. This includes identifying your unique value as a franchise. What do you offer customers that other franchises don’t? Look at your competitors and see how you can fill the gaps that they are missing.

You should also define a target market. If you don’t know who you’re marketing your business to, your branding and marketing will lack direction. It is always best to have a properly defined market before you start, so you don’t mistakenly alienate those you’re targeting.

Lastly, you need to identify the revenue streams that will make up your franchise’s income. You need money to sustain and grow your business. Consider franchise fees, royalty fees, product sales, and other revenue sources.

Note: This is not an exhaustive list of how you define a business model, but a brief overview of key components you should consider.

2. Not Working With the Right Franchisees

At Eden Exchange, we know how difficult qualifying potential franchisees can be. Our business buying and selling platform strives to make this easier for franchisors with several key features, including pre-qualified leads, expert guidance, and a network of active buyers looking to become franchisees.

You’re unlikely to succeed if you don’t find the right franchisees. You need to ensure that the franchisees have the skills, qualifications, and commitment to run a franchise location seamlessly.

Don’t rush into partnerships and ensure you do your due diligence. Run background checks, conduct interviews, and ensure that any franchisee you choose is a good fit for your overall business model and growth ambitions.

3. Inadequate Support for Franchisees

When potential franchisees search for a franchise to join, they will look at the training and support you offer. It is an important part of becoming a franchisee and is the make or break for many.

You won’t attract franchisees if your support could be better. In addition, if you’re not offering comprehensive support, your franchise will lack consistency across locations.

Services will be disjointed if all franchises don’t follow the same standard operating procedures (SOPs).

Ensure that all training guides are comprehensive and that all SOPs are current. You can also ensure you’re always available for franchisees to contact.

Providing ongoing support is the best way to build a good relationship with your franchisees and ensure success.

4. Lacking Quality Control

Quality is essential for a good franchise. If you’re on top of quality control, you will ensure consistency and outstanding performance in every location. Failing to implement quality control procedures will lead to varied experiences across locations. Product quality could differ and your brand reputation will plummet.

Ensure that you implement strategies for quality control, including

• Standardisation: Make sure that all operating procedures, guidelines and training are the same across the board. This means all franchisees are getting the same information no matter where they are.
• Audits and inspections: Conducting regular inspections may include everything from mystery shoppers to remote monitoring methods to on-site, scheduled visits. These inspections offer franchisees a chance to address areas for improvement and make changes.
• Quality assurance team: With a dedicated department, larger franchises can stay on top of all issues to ensure consistency throughout the franchise.
• Continuous improvement culture: Fostering a culture of improvement is an excellent method of getting your franchisee to think about quality and consistency. Encourage franchisees to work together, share advice and tips, and raise quality.

5. Insufficient Marketing and Branding Guidelines 

With a franchise, many customers arrive at your establishment with certain expectations. They will have preconceived expectations for what your services will be like. This means services, products, and marketing need to be consistent.

Marketing is a huge part of creating a successful franchise. Your brand should be recognisable across the region, country, or continent you operate within. Think of the McDonald's logo––it is recognised internationally because it is consistent.

So, when starting a franchise, you must be consistent with branding across the entire operation. Think about everything including logo, brand colours and typography.

6. Not Moving With the Times and Innovating

No business is impervious to technological advances, and instead of shying away from them, you should use them to enhance customers' experience. An excellent way to stay on top of new trends is to watch your industry market.

Adapt to industry shifts, consumer demands, and technological advancements to avoid stagnation.

You should also seek feedback and work closely with franchisees. You won’t have as much interaction with people on the ground as the employees do in each location. Encouraging them to come to you with ideas for innovation is a brilliant way of staying on top of changes and making the most of trends in your industry.

7. Not Having a Comprehensive Franchise Agreement

A robust and legally sound franchise agreement is imperative to protect yourself as a franchisor and your franchisees. You must ensure that your agreement covers everything, including fees, territorial rights, operational guidelines, and support.

We highly recommend working with a solicitor to ensure that the agreement protects all parties and is comprehensive. 

How Eden Exchange Can Help You Succeed as a Franchisor

Eden Exchange is an all-service business buying and selling platform, but how can it support you as a franchisor?

To begin with, we offer a space for franchisors to list available franchises on our website. Listings remain up on the website until they are sold and can be viewed by our network of thousands of active buyers.

We also offer a secure space for document sharing, and a place to qualify franchisee leads. This means you can communicate securely with potential franchisees and share sensitive information. You can also take the time to ensure each lead is a good fit for you and your franchise.

If you ever need support, our team is always happy to help. We have a range of experts on hand to give you guidance and support through the entire lead-qualifying process and afterwards.

Final Thoughts

Setting up or growing a franchise can be a difficult time. You’re likely to make a few mistakes along the way, but that does not mean you can’t be successful. The above errors are the most common that we have seen over the years, and hopefully, with our guidance, you can avoid them easily.

If you’re looking for support or just a place to list your franchise online, check out the Eden Exchange platform today. Our team can give you more information, so get in touch now to find out how we can help.

Who we are

Eden Exchange is an integrated multi-channel platform, simplifying business buying and selling. We match, refer and connect business buyers, sellers & brokers in an ecosystem that facilitates frictionless franchise, business and finance transactions. Visit www.EdenExchange.com and connect with our engaged and multidimensional transaction network today.