Franchising Pitfalls To Avoid

Buying into a franchise makes a lot of sense. For those with strong business acumen, buying into an established brand provides a head start on marketing the business as potential customers are already familiar with the brand and its products.

The training, support network and franchising software solutions that are already established are hugely beneficial for those who are just starting to develop their business by offering a safe platform for raising concerns and seeking advice.

However, there are some pitfalls to franchising that prospective franchisees should be aware of. They are not insurmountable by any means, but being prepared for them means that you are better placed to overcome them.


Long-term agreements

Everybody enters into a business thinking that it will be their career for as long as they want to work. However, there is always a possibility that life will change or you will want to take the business in a direction that you are not able to because you do not own it. In these cases, being tied into a franchise agreement for 10 years or longer can be disadvantageous as extracting oneself from a franchise agreement can be a convoluted process.

The easiest way to guard against this situation arising is to ensure you and your franchisor see eye to eye before the franchise agreement is signed. Be honest and open with each other about your vision and goals to reduce the likelihood that you will find yourselves at odds in the future. You will also need to commit to making a success of your business, so if you do wish to exit the agreement early, you will stand a higher chance of selling the thriving business to somebody else.


Brand dilution

Brand dilution occurs when there are multiple branches of a particular franchise operating within a small area. This results in fewer customers frequenting each store than there might be if there was less choice for consumers.

Addressing this is simple: do your homework and do not attempt to join a franchise that already has one or more branches operating in your local area. It is hard to stand out from the crowd when you are using the brand's marketing material and selling its products while competing against someone else from the same brand who has been established in the area for a longer time.



By understanding these two potential issues, you will be well placed when considering what franchise you wish to be a part of. Choose a franchise whose products or ethos you are passionate about and that will be unique within your local area, and you'll stand a much greater chance of success.