7 Common Mistakes Franchisees Make


7 Common Mistakes Franchisees Make

In the franchise industry, potential investors (franchisees) base their business choices on how successful / proven the franchise business is. Here, the franchisee has realized that the franchise business will be better or lower risk because there is a factor of experience from the franchisor.

But unfortunately, the success of the franchisor alone does not automatically make franchisees succeed because franchisees also play an important role in this business.

Read also: 8 Reasons Why Franchising is a Popular Business in Indonesia

7 mistakes often made by franchises

Mistakes that are made, certainly lead to failure. And the fact is, there are many mistakes that franchisees make that causes their business to not develop. At least, 7 big mistakes are commonly made and can be dangerous for the franchisee and of course it will also have a bad impact on the franchisor as the brand owner if the franchisee fails.

  1. Lack of Information

    The first mistake a franchisee makes is generally due to a lack of information about the business to be engaged in. Lack of information is not simply because the franchisor doesn’t know, but because the franchisee either ignores information or doesn’t want to know.

    Often because the business that you want to buy is quite well-known. Franchisees assume that it is “sure” to be successful, moreover, the investment value is quite large, thus adding to the impression that “sure” success is already in hand.

    This condition is clearly dangerous for the franchise business itself. This initial mistake can result in a business failure that should be profitable.

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  2. Assume Everything is Franchisor Responsibility

    Franchise business practices are still by the misconception that the franchisee business is fully the responsibility of the franchisor. Franchisees act and think only as investors, as if they think of themselves as non-factors for the success of the franchise business. This fact is still often found in franchise business practice.

    Franchisors are indeed responsible for business guidance for franchisees, training, operational systems, and procedures, as well as raising the brand as a whole. However, day to day operations are the responsibility of the franchisee.

  3. The Feeling Factor Is More Dominant Than Business Analysis

    Not a few franchisees buy franchise rights because of feelings and emotions without careful consideration of ratios. Feeling considerations make prospective franchisees not observant in choosing a franchise business. Therefore, even if you have a strong interest in a franchise business, prospective franchisees must first research it in depth.

    Because later, the business will be run by franchisees. Family support also cannot be ignored in choosing a franchise business. They will provide mental support when running a business.

  4. There is no ability in the selected category

    Not all businesses can be suitable for everyone because everyone or franchisees have different characters. Therefore, the choice of business must be fit to the franchisees. Prospective franchisees as much as possible avoid the choice of business categories that are not in accordance with their personal character. If the selected business character is in accordance with the character, then the franchisee can live it with enjoyment.

    Selection of the appropriate type of business will encourage franchisees to be involved as well for improvements and provide input for the franchisor so as to bring benefits to both parties.

  5. 5.Adequacy of Operational Fund Support

    Franchisees generally think that buying a franchise business will get support from the franchisor, this makes them forget that they have to have additional funds or reserves for daily business operations. Examples include operational funds to pay employee salaries, operational costs for electricity, water, telephone, and others.

    Read also: Assessing Franchisees Financial Statement, How important to Franchisor

  6. Conflict with Franchisor is generally due to Inadequate Communication

    In terms of doing business, it is important to always think of solutions that benefit all parties, therefore as a franchisee do not think and assume that you are a customer of the franchisor. But as a business partner, therefore as a business partner, communication is very important in order to succeed.

    The slightest thing should be discussed directly with the brand owner (franchisor). In addition, the intensity and quality of communication can also avoid misunderstandings that may arise between franchisees and franchisors. Usually, routine communication occurs between the franchisee and the franchisor at the beginning of the Cooperation, but over time communication will decrease, especially if the distance is quite far from the franchisee.

  7. Do not read the franchise agreement carefully

    All forms of franchise business cooperation are contained in a franchise agreement. For that, don’t feel lazy to just read or even understand articles by article in the franchise agreement.

    This agreement will be used in carrying out business cooperation for the agreed period. Make sure the agreement is win-win for all parties.

These are the things that generally happen to Franchisee’s mistakes in running a franchise business which can result in losses for both parties. Hopefully we can learn together in order to get optimal benefits from the Franchise partnership.

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