Why Franchisors fail, common mistakes made by franchisors
Perhaps, franchising is the easiest way to expand the business, but it may not prove to be so in certain cases. It is difficult to forecast about the success of the franchise model, as a number of factors and forces are at play. Provided the franchisor is thoughtful, the backsliding can be checked and proper measures can be taken.
Some common slips often made by the franchisors are unreasonably heightened projections, unjustified franchise kits, too much importance given to franchise fee collection, neglect of feasibility and plan stagnation.
Franchisor must have clear objectives in mind while offering the franchise. The goal of franchising is to expand and not to raise money for the business by selling the units to different people. Franchisors have to be careful about the growth they want to achieve in a particular time and to sustain that growth. The franchisor should beforehand know as how many units are to be opened and what would be there overall effect in the market.
Inappropriate Franchise Kits
The franchise kits must be well provided and evaluated. The real task of franchisor does not end with the signing of the agreement but in maintaining a persistent relation with the franchisee and helping him to succeed as if it were your own unit.
Franchise Fee and Nothing Else
Some franchisors just know to offer franchisee units at the rate of money. They think of their model as something that can be exchanged for money and are more interested in collecting franchisee fee. The franchisor in all these cases considers himself to be the seller and does not see from a franchisee’s point of view as whether the unit will sustain in the long run or not.
The feasibility factor is very crucial so far as success is concerned. The franchisor that intends to franchise the business must have a comprehensive knowledge about the marketplace, about socio economic conditions of the people, about various systems related to the franchise business, etc.
Franchise plan needs to be evaluated over a period of time. There are so many updates and developments that change the market conditions, the competitions and preference of the people. Making necessary changes from time to time helps in the success of the franchise plan.