12 December 2023

10 Struggles that Franchises Encounter

By Ronald Smith

Being a franchise owner comes with its fair share of challenges. Let’s explore some of the obstacles that make running a franchise a bit tough.

1. Finding the Right Location

One of the first hurdles faced by franchises is finding the perfect place to set up shop. It can be difficult to find a location that fits all the requirements and attracts the right kind of customers.

2. Dealing with Competition

Competition is everywhere, and franchises have to find a way to stand out in a crowded market. It takes creativity and hard work to differentiate from other businesses in the same industry.

3. Hiring and Training Staff

Finding and training reliable employees can be a real challenge. Franchise owners need to ensure that their staff is well-equipped to provide excellent service while maintaining the brand’s values.

4. Adapting to Market Changes

The market is constantly evolving, and franchises must keep up. From new trends to changing customer preferences, it is crucial to adapt and stay ahead of the game.

5. Managing Finances

Running a franchise involves handling finances, such as budgeting, tracking expenses, and ensuring profitability. This task can be overwhelming, especially for those who are not experienced in financial management.

6. Meeting Standards and Regulations

Franchises have to comply with a set of standards and regulations imposed by the franchise agreement and government authorities. It requires careful attention to detail and timely adherence.

7. Building a Strong Customer Base

Establishing a loyal customer base is crucial for a franchise’s success. It takes time and effort to build trust with customers and keep them coming back for more.

8. Managing Marketing and Advertising

Effectively promoting a franchise requires skillful marketing and advertising strategies. This includes online and offline campaigns to attract customers and increase brand awareness.

9. Keeping Up with Technology

As technology advances, franchises must keep pace to remain competitive. Embracing new tools and systems can enhance efficiency and provide a better customer experience.

10. Balancing Work and Personal Life

Running a franchise can be time-consuming, making it challenging to achieve a work-life balance. Finding ways to prioritize personal well-being while managing the demands of business is essential.

While owning a franchise can be demanding, facing and overcoming these challenges can lead to great success. If you’re considering becoming a franchise owner, remember that with dedication and perseverance, you can conquer these obstacles and create a thriving business.

10 Struggles that Franchises Encounter

So many people like me dream of starting their own franchise. It’s a great opportunity to make a lot of money by using an established brand. But running a successful franchise comes with its fair share of difficulties.

What Challenges Do Franchise Owners Experience?

At first glance, owning a franchise may seem easy. You don’t have to create a brand from nothing. You don’t have to worry about how to make your brand stand out, because it’s already well-known. And you don’t have to start from scratch because the basics are already in place.

So, instead of starting from scratch, you get to own a brand that’s already well-known and has a strong marketing presence. But let me tell you, it’s not a walk in the park to make it profitable. There are quite a few obstacles that successful franchisees have to conquer. Things like costs, finding and keeping skilled staff, and staying on top of all the regulations can be major headaches.

10 Challenges that Franchise Businesses Face

For your franchise business to thrive, a lot of things have to go right. It’s not just about picking the right locations and finding the right people to run your franchises.

Now let’s dig deeper into some of the challenges that franchise business owners often have to deal with.

1. The high costs of running the show

Starting a franchise business requires you to spend a significant amount of money. And you’ll need quite a bit of it. Let me give you an example – opening a Taco Bell franchise can cost anywhere from $1.2 million to $2.9 million, plus an additional $45,000 as a franchise fee.

Some franchise brands also require potential franchisees to have a substantial amount of money on hand when they approach them. This is important for the franchisor because it shows that the new franchisee has the ability to expand when necessary. However, for small business owners, this means putting in a lot of effort before even discussing the franchise agreement.

2. Establishing a strong foundation

When it comes to franchises, one common problem is establishing a strong foundation. This can be particularly challenging for new franchise owners because it requires a lot of time and effort. There are several important factors to consider in order to ensure smooth business operations.

3. Dealing with employee turnover

Compared to other types of businesses, new franchise owners often face a higher rate of employee turnover. This is especially true in the restaurant industry, where turnover rates can reach up to 75%.

For franchise owners, providing excellent customer service is essential. However, the high turnover of employees makes it even more difficult to meet this challenge. Additionally, valuable employees are always in high demand, which makes it hard to keep them for a long time. They can easily find other job opportunities elsewhere.

4. Ensuring consistent branding

When your business is closely associated with a well-known brand, it may seem like a fantastic idea. However, there are challenges that come with it. For instance, when it comes to branding, you will have limited control. Additionally, any controversy surrounding another franchise of the same brand can negatively affect your profits.

5. The Approval Process Takes Time

Franchisors depend on franchisees to enhance their brand. That’s why they usually have lengthy and complex processes in place before approving a potential franchiser. It’s also important to note that franchise agreements often involve contracts spanning 10 to 15 years. In other words, it’s normal for there to be a long wait before things get moving.

6. Achieving Success Locally

When you think about starting a franchise, one of the most important things you should do is research the local community. This should be at the top of your priority list because the people in the area will have a big impact on whether or not your business succeeds. It’s important to understand who your target audience is, what they want, and why they would be interested in what you’re offering. In addition to learning about the community, it’s also a good idea to analyze the competition and see what they’re doing.

7. Not having control

When you start a franchise business, it can be tough to accept that you have less control over how it operates. The brand holds all the power and makes all the decisions. This can be a challenge for many entrepreneurs, and sadly, it causes some businesses to fail. But here’s the thing: as a franchisee, you and the franchisor are partners in this venture. You both want to succeed. That means you need to have mutual respect and a clear understanding of how the business will be run.

8. Building a strong team

Just like any other business, a franchise needs a strong team to thrive in the long term. Keeping your employees happy and motivated is crucial if you want to stand out from the competition. It’s also important to provide them with ongoing training in technology so they can better support your customers.

9. Developing an exit strategy

Having a successful franchise business doesn’t guarantee its survival. Sometimes, there are factors beyond my control that can lead to failure. That’s why it’s crucial to have a plan in place to minimize losses and exit the business if necessary. However, I’ve come to realize that exiting a franchise can be more complicated than I initially thought. It’s important to understand that each franchise system has its own unique strategies for exiting.

10. Balancing Work and Life

Running a franchise is not something I can do on the side. It requires my full attention and dedication, just like running any other company. In order to succeed, I have to be fully committed and pay attention to even the smallest details that could potentially lead to business failure.

What is the Greatest Challenge for New Franchise Owners?

The first and most daunting challenge for new franchise owners is getting the money they need to start their business. Franchisors offer training and support, but they also have certain requirements that potential franchisees need to meet before they will approve their application. That’s why having enough money in the beginning is crucial for success.

When Should I Get in Touch with the Franchise Headquarters?

If you’re thinking about becoming a franchise owner, there are a few things you should have in place before you reach out to the corporate office of the franchisor. You need to have a solid business plan and enough money to fund your venture before you can move forward.

What Are the Biggest Risks of Owning a Franchise?

When it comes to franchising, there are some big risks that you need to consider. First, you have to invest money upfront before your business is even up and running. Second, you need to make sure you have enough capital to get approval for your franchise. And finally, there’s the possibility of damage to your franchise that is beyond your control.

Is it Worth Starting a Franchise Business?

Even with all these challenges, starting a franchise business can be incredibly rewarding. If you have the right team, a supportive franchisor, and a clear vision for your company, you can overcome these obstacles and succeed.

  • Take a look at our Franchise Guide
  • Explore Franchise Financing Options
  • Learn about what exactly is a Franchise
  • Weigh the Pros and Cons of Franchising