Biggest Franchising Challenges

1. Biggest Franchising Challenges Franchising has been embraced by many entrepreneurs excited to run their own company. But the characteristics of a franchising business are disparate in some decisive respects from those of other start-up businesses. Some businesspeople have even gone so far as to portray franchisees as glorified employees of the franchisor, the company that owns the trademark and business thought that the franchisees utilize. Other observers find this portrayal of the relationship to be deceptive and simplistic, but they also acknowledge that there are many facets of franchising that a potential small business owner should learn about before entering into such franchise. Any rising business will face some major impediments along the way and a franchise business is no different. Many franchise businesses experience a hasty initial period of growth – it could almost be labelled as a “honeymoon period” – when the concept is brand new and electrifying, the franchisor is full of notions and energy and new franchisees coming on board are equally stirred. However, a little further down the line, it’s not uncommon for franchisors to hit a brick wall and experience complications in expanding their franchise network further. The certainty of life as a franchisor managing the contending needs and demands of a numeral franchisee kicks in, they discover an entire range of issues rising which they hadn’t expected and dealing with those needs and issues becomes such an onerous job that the franchisor then is left with no time to bestow to further expansion. www.frantastic.in 1

2. Sadly, it’s often at this point that both franchisor and franchisees become disenchanted and the business either flops to progress further or simply fails. So, what are the 5 most common challenges facing franchisors at this particular point in their business expedition – and how can evolving franchisors learn from these experiences and overcome the same impediments themselves? 1. Insufficient capital Franchising business in the initial place is an expensive business, likely to comprise the hiring of a franchise consultant as well as branding experts, lawyers, and many more. It’s common for new franchisors to undervalue these costs and contrariwise to overvalue the fees that a budding new franchisee will be equipped to pay, expressly in the initial stages of growth of the brand. It can take much longer than projected to recoup the early costs outlaid in launching the franchisewhich means that the franchisor then has no funds to support the succeeding stage of expansion. To evade this, franchisors should safeguard at the outset that they have access to enough capital to support the next stage of progress. Evolving franchisors should also be heedful to ensure that they have set aside a satisfactory budget for franchise recruitment – without a sturdy stream of enquiries and novel franchisees coming on board, the business cannot progress. 2. Inadequate support structure Novel franchisees require a significant amount of support, yet many novel franchisors neglect to copiously put in place a satisfactory and growth-ready infrastructure for support systems, procedures and processes. This means that when the business experiences an unexpected period of expansion with novel franchisees coming on board, the franchisor is not furnished to cope. This can embrace anything from simple things like not having the website dimensions to support an upsurge in traffic or technical support for franchisees, to fading to have appropriate systems in place for training and quality control. This, in turn, leads not only to displeased franchisees but can also affect service delivery, therefore, instigating damage to the brand. When working on their early franchise model and developing their infrastructures and procedures, franchisors should safeguard that they will be able to cope at volume – and of course that, as at point 1 above, they have the capital in place to assist it. www.frantastic.in 2

3. 3. Recruiting (and retaining) the right people The long-term achievement of any franchise business, of course, rests on the superiority of its franchisees. The franchise sector is a gradually crowded marketplace and, at times when a franchise business can be under growing financial trauma, a franchisor could easily be tempted to jump at the panorama of a potential franchisee who is offering money to acquire into the franchise, without going down the appropriate due diligence course. Quality rather than quantity is the key to building an efficacious franchise brand – franchise recruitment blunders can end up being very expensive ones! www.frantastic.in 3

4. And once a franchisor has instigated to build a franchise network, the significant thing is to take the time to build robust and supportive relationships with the prevailing franchisees. A happy team of franchisees is the major asset of any franchise business! Without constructive feedback and recommendation from existing franchisees, it’s an uphill challenge to recruit novel anyone. 4. Adapting to the role as Franchisor This sounds meek but it’s a difficult shift for any evolving franchisor – taking the obligatory steps away from running the essential business on a day to day basis and assuming the role and responsibilities of a franchisor. A franchisor must be a leader, able to instigate and motivate the team and to keep the brand moving frontward – focusing on recruitment, support, innovation and strategic development. It’s all too easy to become drawn back into day to day operational problems but the efficacious franchisor will put strategies and personnel such as an enthusiastic management team in place to deal with those facets of the business at an initial stage. This frees the franchisor up to emphasis on leadership and enlargement. 5. Enforcing the brand vision and consistency As a franchise network commences to expand geographically, nationally or internationally, the franchisor faces perhaps their major challenge – how to ensure that those franchisees further afield are performing and delivering the service to the essential brand standards and requirements. When a franchise business launches, it’s first franchisees are most likely to be moderately local to the franchisor and the original fundamental business, meaning that on hands-on terms it’s feasible for the franchisor to be heavily tangled in monitoring performance. As the franchise network expands in both volume and distance this is no longer likely to be viable and so the franchisor must have tactics in place to ensure quality control remains a significance. This is why the points above in terms of recruitment and infrastructure are so very imperative – but correspondingly crucial is that a franchisor safeguards that all franchisees are entirely engaged in the brand vision so that they sense pride and loyalty in it and become exceptional brand ambassadors in this succeeding stage of business growth! www.frantastic.in 4

5. Conclusion The business model of franchising is outstanding. Franchising does offer you a system to work with and most of us tend to chase the brands that give you the finest ROI for your hard-earned money. Franchising is a great substitute for developing chain stores, to provide goods and services to the customers and evade investment. Although franchise proprietorship is not for everybody, for those that align their skill sets with the right franchise proposals, being a franchise owner usually blows working for someone else. Franchising isn’t a silver bullet for business expansion until done appropriately using expertise, but when the advantages overshadow the disadvantages, it can be a prodigious way to raise your business. This requires high expertise, knowledge and planning. At Frantastic, we support our clients with numerous franchise opportunities under different sectors. We assist our clients in overcoming challenges of the franchise business and thrive. www.frantastic.in 5