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Common Obstacles You'll Need to Navigate Around in Your First Year as an Emerging Franchisor

When done right, franchising your business is an immensely rewarding strategy.

Not only is franchising a proven and effective way to grow your brand, but it’s also a successful way to grow the economy and keep it strong, adding businesses and jobs in markets across the globe. A strong economy will likely pay dividends to you and your brand.

Franchising is also gratifying because you provide budding entrepreneurs with a shot at business ownership. You can take pride in helping them grow as successful business owners as they generate profits, create jobs, expand brand awareness and potentially become multi-unit franchisees.

But, even when you put in all the work to prepare your business for franchising, you will likely encounter bumps in the road along the route to royalty self-sufficiency during your inaugural year as an emerging franchisor.

undefinedTempting Shortcuts Lead to Trouble

One of the first franchising challenges you’ll face is the temptation to cut corners. The urge is understandable since quick brand expansion and market dominance are the main reasons you decided to launch your franchise brand. But, taking shortcuts to achieve growth is unwise. Franchising is a marathon, not a sprint.

Two of the most common shortcut temptations include how emerging franchisors award franchises and establishing relationships with franchisees.

  • Awarding franchises without thoroughly vetting candidates – This often happens to emerging franchisors who meet entrepreneurs who are well-capitalized and can easily afford the franchise fee. They’re so eager to grow their franchise brand that they curtail the due diligence process. Franchisors who do so run the serious risk of damaging the brand and stunting its growth if they end up with franchisees who are not a good fit. Franchisees who lack passion for the brand’s mission and core values, disregard brand standards, don’t care about the franchisor’s vision or exhibit any number of negative qualities can sully your franchise’s reputation.
  • Forgoing relationship building with franchisees – It’s not enough to award a franchise and provide training and support to franchisees. You need to grow strong, professional relationships with each one while you’re still an emerging franchise brand. If you don’t, poor validation marks become a real threat to franchise growth. Franchisees want to know they’re being heard when they have concerns, need extra help or have helpful suggestions for the franchise system. Note that the relationship we mention is professional, not personal, and the distinction is important. Franchisees want to like you, but don’t necessarily want to be your friend. They want to know that the partner they have is professional, courteous and respectful, as they in turn should be as well.

undefinedWhen You Lack Capital, Consistency and Time to Adjust

Other common challenges many emerging franchisors have faced in their first year include.

  • Beginning your franchise launch undercapitalized – Laying all the groundwork to begin franchising requires a substantial amount of capital to be spent in several areas:
    • Conducting a franchise feasibility study and a competitive analysis
    • Developing and putting all your systems in place
    • Creating training and other manuals
    • Drafting your Franchise Disclosure Document and franchise agreement
    • Investing in research and development
    • Hiring the right management team

It’s not uncommon for emerging franchisors to face dwindling reserves for franchisee recruitment, support and operational costs.

  • Keeping franchise infrastructure fully operational – Franchising is based on replicability. If your operations, support, training and other parts of your infrastructure are inconsistent, then your franchise system is not replicable. If it’s not replicable, it’s not cost-effective or efficient either.
  • Transitioning to the Role of Franchisor – A business owner and a franchisor are not necessarily the same thing. Because being a franchisor of an emerging brand will require you to take on different roles you’ve not performed before, it may be difficult adjusting to the new role.

How to Overcome First-Year Challenges

If you don’t address these challenges, they will become big problems down the road. To learn how to overcome them in your first year running your franchise company, turn to a trusted franchise advisor, Winmark Franchise Partners. With 30 years of franchising experience and more than 800 franchise owners representing over 1,250 locations for five brands, Winmark Franchise Partners can you help grow your brand through sound strategy and expert franchising advice. Contact us here or at (844) 452-4600.