How a Franchise Agreement and a Franchise Disclosure Document differ
There are two documents that are of vital importance...
Part of the reason people are interested in Canadian franchises is the immediate access to advantages such as an established brand and a proven system. Although these components are definitely a critical part of a franchisee's success, a franchisee should not completely depend on these benefits to be successful. That mindset can lead a franchisee to cut corners within their own business, particularly in the three ways below.
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Not fully using the franchisor's support system
Starting any new business can be a stressful and overwhelming venture, especially for a person without much business experience. Franchisees are fortunate to have access to a franchisor who has already created a knowledge system to support them.
However, this valuable tool is often overlooked or underused by franchisees.Whatever problem or obstacle a franchisee is having, a brand founder or another franchisee has likely already encountered it, and they may have a possible solution that can be quickly accessed if the franchisee simply reaches out for help.
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Underestimating the importance of financial review
No matter how sound the brand is, no franchisee should ever assume their new business will be profitable quickly. This is possible but is not the norm. A franchise, like other business types, takes some time to become profitable after it opens in most cases.
Therefore, a franchisee needs to know exactly what is going in and coming out of the business every month. This will allow them to plan ahead for shortfalls and identify business patterns so they can adjust their business practices accordingly. A full financial review should be a part of every franchisee's monthly routine.
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Neglecting the business plan
Although the franchisor will cover a lot of the operational structure and setup for a new location, a franchisee should still have a customized business plan of their own. This is a plan tailored to their business and their community, as opposed to the broader and more general plans provided by the franchisor. While plans vary by business, they usually include areas such as financial projects, products and services, sales and marketing plans, management structure and a market analysis.
You will receive invaluable support, tools and information as a franchisee, but it is still up to you to run your franchise. Therefore, you need to be prepared to put in the time and effort needed to do everything necessary for success.
