If you think owning a traditional store front business or franchise is the answer to your financial problems, guess again. We have always heard that taking up a franchise is less risky business and all you would have to do is buy yourself into a big brand and you would have a flourishing business. But not everything is as easy as you think when setting up and running a business franchise. So before you leap- look at the flip side.
You need big money
Franchisees don’t come cheap. The franchise fees can be a real pain when I comes to reaching deep into your pockets. The fees you have to pay almost all the time will affect your net earnings. The fees added to the expenses of running your business, will leave you making not as much money as you originally thought you. would make. You need a lot of capital to withstand this.
Your product is not so popular
You will be in deep trouble if you happen to collaborate with an ineffective franchise partner. The company may be great, but the brand or service you have chosen may not be what the public wants. People must develop a trust and liking for the brand and only then they will keep coming back. If the public is not interested, that’s when failure happens. If your franchise partner is not living up to customer expectations, you’ve certainly got yourself into the wrong deal.
You have Competition
Every franchise comes with an agreement of exclusivity and this usually means that there is no other franchise outlet of the same company in your area. But if you are taking fast foods for example, you have to ask yourself how many fast food centers are there in your locality. Will they pose a threat to running your franchise business? Or is there ample scope in the area for your product or service. If you are not careful in your survey other small businesses may start offering similar services or products, and take your customers away.
The biggest mistake you can make, is to set up a franchise in the wrong location. Can your shop be found easily? If no one knows where it is how can it draw customers. You cannot sell even the best products in the world if customers don’t have convenient access to your location. Moreover if you want to be in the central area, your cost will go up that much more. You need to be ready to invest on the location or face the risk of failure.
Are you ready for the Marketing?
You found the franchise for sale advertised in the local or national newspapers and perhaps some magazine. You think its a good idea to buy it. Stop and think again. You will need advertising too, once you set up the franchise. Some companies include advertising campaigns in their agreement, but if they don’t you have to promote it in the correct way so that you get customers. If you fail to reach your target audience, your franchise may fail.
Step into the arena of running a business franchise only if you are confident that you have the capital, the marketing skill , the right location and a popular product that people will want to buy. Make sure that there is not much possible competition in your immediate vicinity. If you can overcome these challenges you need not fear failure.