Franchising 101

Franchising 101

Franchise Success by Avoiding Common Mistakes

Mistakes are a part of life. However, learning from mistakes is part of life, too. But if you could learn from the mistakes of others rather than your own, wouldn’t you want to?

There are some common mistakes individuals make when exploring and investing in a franchise, and they’re easy to avoid. Here’s a few to watch out for, so you can improve your chances of success in your new business.

MISTAKE 1: NOT LEARNING ABOUT LIFE AS A FRANCHISEE Sure you have good instincts, but when investing in a franchise, relying solely on your instincts is not necessarily the best decision. Rather than just trusting your instincts, which could land you in hot water with your franchisor, landlord, or tenant, choose to learn all you can before you finalize any agreement. That said, always trust your gut and dig into what may be giving you a bad feeling. Talk with other franchisees. Ask them to share with you a day in the life of a franchisee. Also, speak with other tenants in the shopping center where you’re considering a lease. For both parties, ask whether they would do it again.

Knowledge is power. By learning from a leader within the franchise organization—as well as doing your own thorough research before you dive in—you are setting yourself (and your franchise) up for success. Ask franchisees how issues and disagreements have been addressed in the past. Ditto for tenants.

MISTAKE 2: RUSHING YOUR DUE DILIGENCE

Slow and steady can win the race, even in franchising. While you might be eager to get started as soon as possible, there may be moments where more time—and patience—is prudent.

For example, when choosing a location for your business, never allow yourself to be in such a rush that you choose a bad location or fail to negotiate. You want not only the best rate per square foot, but also a tenant improvement allowance and other benefits, such as free rent. Look to the future by checking current visibility, and try to determine if there’s a possibility of that visibility being blocked, maybe by a new building on a pad site along the property’s outer rim or heaven forbid, road construction. Often, plans for both are made well in advance.

MISTAKE 3: NOT FOLLOWING AND TRUSTING IN THE PROCESS

Remember, you are making an investment in a franchise. That means you’re making an investment in that franchise’s brand, processes, and procedures. Understand what that means and what you’ll need to do to adhere to operations manuals regarding the same. It’s a huge responsibility that may carry some significant liabilities if you’re not in compliance.

You will want to make certain before you finalize your investment that you fully understand the responsibilities—the franchisor’s and your own. Read the small print closely and carefully, so that you are fully onboard when you sign on the dotted line(s). This applies to all agreements—lease, equipment, suppliers, etc. Remember, it’s difficult to put toothpaste back in the tube. So, be diligent on the front end of all transactions and heed the age-old advice of haste makes waste.

Paul Segreto is a recognized entrepreneur, franchise- and small-business professional. His expertise includes startups and turnarounds, strategic planning, business and franchise development, branding, social media and digital marketing with primary focus on restaurants and service-driven businesses.

Segreto founded Franchise Today podcast in 2009 and Franchising & You podcast in 2018. He is CEO of the Franchise Foundry. Contact Segreto at paul@franchisefoundry.com