Why Do Some Franchisees Fail If The Franchisors Business Plans Are Proven To Work?
Many who end up buying franchises do so because they believe the franchisor has a proven track record. If they fail they generally blame the franchisor’s business plan or methods. Sometimes they say that the franchisor somehow misrepresented the business during the sale, so they can sue and get their money back, even if the fault is that of the franchisee and their business acumen.
One thing that I found in franchising that the “odds” of success or failure were based more on the individual than the “business plan” or on the regional trading area economics, local competition, or working capital of the franchisee, not merely on the numbers of successes or failures of the franchise system over all. If a franchise system has problems, most of this is from the outrageous over regulation as the franchisor is forced to mold their business model to fit the “Governments Inept” skewed view of what franchising is, forcing all “franchises” within a wide definition to modify their businesses for the right to franchise.
With regard to franchisees being “lured” into bad investments? Well, those franchisors crash pretty fast, quick buck, types, in franchising the money is made long-term. It costs millions to get the ball rolling for the franchisor and the growth pains, there are always initial cash flow issues. Some franchisees and franchisee rights advocates say that lots of transfers are the same as failures. I agree that lots of transfers are an indication of “failures” in many cases but not all of them, let’s say “Most!”
Franchisors should be oh, so careful to make sure that the franchisee is a good match, has the working capital and never hire “embellisher” sales people. It may make money in franchise fees, but down the road destroys a franchise system. Why Do Some Franchisees Fail if the Franchisors Business Plans are Proven to Work?
It depends and there are many circumstances, however you must understand that a failure in a franchised outlet is not always the franchisors fault and the success is always the franchisees responsibility. I hope you will consider this.
L. Winslow is an Economic Advisor to the Online Think Tank, a Futurist and retired entrepreneur http://www.worldthinktank.net Currently he is planning a bicycle ride across the US to raise money for charity and is sponsored by http://www.Calling-Plans.com and all the proceeds will go to various charities who sign up.
Tags: business acumen, business model, business plan, business plans, buying franchises, cash flow issues, franchise fees, franchise system, franchisee, franchisees, franchisor, inept, initial cash, make money, match, mold, proven track record, regional trading, rights advocates, working capital
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