What to do if your franchise is in trouble

There are a multitude of reasons you may feel that your business is in trouble. As a franchisee, you are in the fortunate position of being able to discuss this situation both your franchisor, who is equally committed to the success of your business, and your franchisee network, who may have experienced and overcome similar difficulties. However, if you are encountering difficulties for the first time, it can be daunting to reach out. You may be unsure who to approach, how your approach will be handled, and what your options are. It is helpful to take early action as this may be the difference between failure and recovery. Here is some advice on finding the best way forward.

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First steps

If you feel that your franchise is in trouble, you must assess the situation. Try to identify the reasons your business is struggling and consider ways of addressing these root causes. You will need a different resolution to handle escalating staff costs than you would to overcome declining sales. Assess historical data and identify when the issue first arose. Consider how you initially handled it and whether that approach yielded success. If it did not, what could you do differently?

Next, make an action plan. Once you have identified the reasons for your struggles, you can begin to address them. Your action plan will prioritize the issues you face so you can address the highest-priority ones urgently, leaving lesser issues for later consideration and action if necessary. Keep in mind that your plan must be SMART: Specific, Measurable, Achievable, Realistic and Time-bound. If it is not, you are at risk of floundering deeper into uncertain territory rather than taking bold and decisive action that delivers results.

Discuss your plan with your franchisor or another trusted advisor. Before you implement your plan, make sure that it will not contradict any brand messaging or impinge upon brand consistency. Often, professional business advisors, legal specialists and accountants will have seen other clients experience similar issues and will be aware of how they resolved them, the actions they took, and the success of those actions. With this broader level of knowledge, they are well placed to advise on the likely success of your plan and help you to hone it.

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Seek professional advice

Most franchise difficulties occur as a result of fluctuating market conditions. With the right support and the early implementation of targeted interventions, many problems can be overcome with relative ease. In some rare cases, external forces will render a previously viable business unaffordable. If this is the case, decisive action is needed to contain the situation and limit the damage. Always seek advice and guidance from your franchisor or a trusted business advisor when you are unsure how to proceed.

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