Common Problems Franchise Businesses Face and How to Solve Them

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With over 773,000 franchise establishments in the U.S., it’s clear that plenty of entrepreneurs find this type of business a fruitful endeavor.

And what’s not to love? Unlike setting off on your own, purchasing a franchise means running a business with an already-established brand, tried and tested system, and a network of support.

If you want to own a restaurant or open a smartphone repair franchise, you can already hit the ground running instead of starting from scratch.

As a franchisor, on the other hand, franchising your business is a great way to earn passive income from the royalty fees you’ll regularly receive from your franchisees.

With that said, running a franchise isn’t without its challenges. Below, we listed some of these challenges new franchises encounter and how you can overcome them.

  1. Having adequate financial capital

As a franchisor, one of the most difficult challenges to overcome is having enough capital. Franchising your business is expensive and requires a ton of resources that also cost you money. From hiring lawyers and cosultants to the initial costs of launching and supporting the franchise, there’s plenty of financial considerations in franchising.

What’s more, it may take a while before you can recoup the costs related to launching your franchise. This means you may not be able to support the next stages of your brand’s expansion right away.

The best way to overcome this challenge is to ensure you have sufficient capital and then some from the get-go. As a part of proper preparation, having enough budget to support not just your first franchisee but also further franchise recruitment will help you achieve growth faster.

  1. The lack of autonomy

Plenty of people who get into franchising do so because they want to call the shots and be a boss. But while franchising allows them to adapt the franchisor’s tried and tested system for success based on different factors like location and customer base, running a franchise still doesn’t allow for too much creative freedom.

Some franchises have provisions in place in the franchise agreement that prevent franchisees from coming up with their own products or even promotions to ensure branding uniformity.

This can become a major hurdle for franchisees who seek independence. If this level of control over your business decisions is not something you can take well, it’s good to remember that the franchise owner is just as invested in the business as you are, if not more so.

They don’t roll out plans and initiatives that haven’t been tested. Instead, even the most minute detail or change is throughly planned and researched to ensure profitability. As such, your ideas may need to get through these processes too before becoming a standard procedure in your branch.

franchise business

  1. Recruiting and retaining the right people

Employee turnover rates tend to be high in franchise businesses, so one of the biggest challenges you may face is finding the right people and keeping them around. This is crucial since consistency is important in franchises and it’s difficult to achieve it if you constantly have new staff.

One way to improve employee retention is through strategic hiring. Start by looking for highly qualified, responsible, and motivated people who can lead your staff. Have them undergo proper training to equip them with everything they need to succeed in their roles, and ensure that they understand the value of their position.

These team members can become the pillars of your staff, prepared to do their work properly. And if you add proper acknowledgment of their great service, you can increase their job satisfaction. In turn, it will be easier to keep other good, hardworking staff members around.

  1. Enforcing brand vision and consistency

Every franchise owner wants their franchise network to expand. After all, this means your business is a success and you’ll earn more. But there’s a challenge on the flipside of this progress: it can be difficult to maintain consistency.

When your first franchise launches, they’re likely within easy geographical reach. As such, it’s easier to monitor their performance. But it’s not as easy to ensure that franchise branches farther out from your headquarters are delivering the level of service your brand requires.

This is why it’s important for franchisors to ensure that all franchisees are well-versed and fully engaged with the brand vision. When they know it inside out, they become better brand ambassadors and are able to reinforce branding consistency no matter how far removed they are geographically from the main branch.

Like any business, franchise establishments have to jump through various hurdles on the way to success. But equipped with the right solutions, you can face these challenges and come out on top.

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