Franchisor Failure Is Mostly Predictable
Why franchisors fail is a question that haunts the franchise industry. At least it should. Franchise failure kills not only franchisors, it ruins many more franchisees. As in all cases where there is government influence, the industry could resolve a number of failure causes. But that means an unlikely major overhaul.
To an experienced eye, the reason for franchise failure as well as forecasting one should be fairly easy. But prospective franchisors generally can’t see the obvious. How could they? They don’t have experience. From consultants who lack expertise and/or honesty, to business owners who are stubborn about facts, there’s lots of room for failure. A great deal of that failure however, is avoidable. It requires less dreaming and more critical thinking.
Why Franchisors Fail – The Alpha & The Omega
The business should never have been franchised! Clear enough? The reasons could be ownership, the concept itself, the timing, dishonesty, or any other number of factors. Again, experience can predict most potential problems and honesty will expose them. But, if a consultant wants a fee or an overzealous business owner wants to sell franchises, then franchising is going to happen whether it should or it shouldn’t.
Businesses Are Candidates For Failure When:
- Deception and/or lack of expertise exists. Consultants have varying levels of ability and honesty.
- Franchisor is inept or not well intentioned. Only time exposes bad franchisors. But franchise buyer due diligence offers protection.
- The concept wasn’t franchise material. As I say: Any business can be franchised. But that doesn’t mean it should be.
We’ve written about the temptations to franchise a business. The fact is, they’re real. Although perhaps hard to accept, appealing to the ego of a business owner to move forward can be kindergarten level. Unscrupulous consultants have been forever looking for a quick score.
Franchise Landmines Are Mostly Avoidable. Think With Your Head Not Your Heart.
Our mission is to help clients understand what franchising might look like for them as a franchisor or a franchisee. We accomplish that mission through the only means possible: education not salesmanship.