THE REASONS WHY A FRANCHISE BUSINESS FAILS
We all know that there is only a small percentage of failure in every franchise business. Estimated are 2 out of 10 franchise businesses experience loss and incompetent profitability. However, it is not also good to see those franchisees fail, it is important to make a move and study the reasons why it happens. There are a lot of components and circumstances that can affect your business outcome.
Here are the reasons why some of the franchise business fails and to avoid it earlier.
- Choosing an inappropriate location/place.
In any type of business, a place is a key to success and profitability. When you are looking for a location, be sure that your products and services are in demand and wanted by the community. Or choose a place that you only have few competitors to make your business easily stand-out from others.
If you don’t find a location that suits your franchise business, that may lead to failures. It will cause struggles and conflicts in finding prospective customers. A place of your business should have a big domain, to easily build a customer base.
Some franchisors offer location assistance, although we encourage franchisees to personally look for their target place of business. You can make a survey or feasibility study in that area to know the customer’s wants and needs. In this case, you can prevent failures and the wrong choice of a franchise business.
- Lack of business training and seminars.
Before starting a franchise business, it is a must to attend all the training and seminars. It will help you to run the franchise right and properly. Many franchisors provide those supports and will give on-going assistance to reassure that you are on your way to success.
In entering a business, you need to have knowledge and skills that will make you stand-out. Although, experience in business is not necessarily needed since franchise business offers the right training. This will give you the chance to be expert and knowledgeable on your brand, products, and good customer service. If you lack this expertise, it will also affect your business profitability and customer’s long-term relationship with you.
Make sure to invest in a franchise business that offers adequate training programs and never-ending support. Always remind yourself that your franchisor is your business partner, and their responsibility is to help you on your way.
- Does not invest in marketing and promotional activity.
We know that franchisors usually invest in nationwide marketing ads and campaigns to promote their business. And franchisees should also invest in promoting their business locally to inform and attract many customers. There are a lot of promotions in a small area to emphasize your business.
You can use social media sites to promote your business, like creating a Facebook or page that may attract more customers within the local area. It is important to make it educational and entertaining to catch the attention of your target customers. Also, post great photos and videos to boost more viewers and audiences.
- Paying monthly royalty and advertisement fees.
Although it is a significant thing in your franchise business, we can’t deny the fact that you will easily lose your profit and income. It will be monthly burden expenses for you if you don’t have enough budget or saving for those things.
Having monthly fees and other payments can prevent you from being a profitable business owner.
The good news is there are a lot of franchisors that are not collecting other fees and expenses monthly. Some of them have a scheme of “no royalty and renewal fees”.
You can search those franchisors in Google and their websites. -www.fab.ph