Franchise ownership is a significant financial...
If you are planning on becoming a franchisee in Canada or are already in the process of doing so, you have a long yet satisfying road ahead of you. As a franchisee, you will get the chance to build your business from the ground up with the help of your franchise's system and resources.
However, no matter how great a franchisor or their system is, there is still a major factor that could harm your success: you, as the franchisee. Before you open your doors, keep the following franchise mistakes that could doom your business in mind.
Not enough working capital
Minimizing an initial investment is pretty unlikely to create maximum success. If you underestimate your net worth or fudge any numbers, you are placing yourself in a very precarious financial position at the start of your venture. All businesses need working capital, and they tend to need more of it in the beginning to handle expenses while revenue is being built. You must have enough to live on and float your business until it becomes profitable, which may very well take a year or more.
Unrealistic plan for the business
A good franchisor should prevent you from making this mistake, but it is still worth noting, A strong business plan will have goals that are monitored regularly and measurable to keep the business on track. While you may have very high hopes for your business, those are just hopes if they are not realistic and only exist on paper.
Working against branding methods
One of the benefits of a franchise is that you are getting the basics in running the business from your franchisor, and these are proven methods for success. You may have good ideas, too, but as a franchisee, you need to follow the system. Resisting the system could lead to lost sales and claims of breach of contract by your franchisor. If you have ideas you are serious about, you should discuss them with your franchise before taking any action. They may see flaws that you don't due to your lack of experience, or they may see value and find ways to make your ideas work within the system.
Unfocused, distracted ownership
Franchisees have borrowed from franchise revenue to pay for something outside of the business or have stepped away from the business and lost its pulse. Others have failed to see when a shift in the market is needed because they were not focused on their location. A franchise will not succeed without your full focus and commitment.
There is no one business that is free from risk. However, when you know where the potential weak spots are, you can reduce your chances of a franchise failure.