You’ve decided to become a franchisee. Opening the doors to a new franchise location is exciting and full of promise. However, if you’re not careful, it can be a complete disaster.
Thankfully, opening day doesn’t have to be a disaster. By learning about some of the most common mistakes new franchisees make, you can ensure your franchise gets off to a great start.
Just what mistakes should you look out for? Here are seven of the most common.
1. Underestimating Start-Up Costs
Many people think that launching a franchise location is a cheap endeavor. However, your expenses don’t stop once you sign a franchise contract.
You’ll also have to renovate or build your location, purchase equipment to provide goods or services at your location, advertise to find employees and customers, and secure licenses or certifications necessary to your specific business.
Beat this money problem by doing your homework. Find out the price of every aspect of your future franchise location. If the total is more than you’re comfortable with, move along until you find a franchise opportunity that meets your financial needs.
2. Not Understanding the Royalties Calculator
Part of running a franchised business is paying the franchisor every month. In the traditional franchise framework, this means handing over a percentage of your income, month after month. Depending on the franchise, that percentage may be as low as 4 percent or higher than 12 percent.
This monthly royalty lets you use the franchise’s name at your business. It gives you access to the franchise’s best practices and in special circumstances, you get access to the franchise pros who help you maximize profits and grow your location. In these cases, your monthly royalties go to good use.
Unfortunately, percentage royalties aren’t all good news. Because as you increase income, that extra money doesn’t all go to your pocket. A percentage of it goes to headquarters, and you get no extra benefit.
3. Going Too Big Too Fast
Babies don’t come out of the womb sprinting, and your franchise may not either—regardless of how much market research you perform. So if you can, rent the smallest space needed for a successful launch and hire only essential personnel at the start.
Don’t let your excitement and end goals cause you to make decisions that will put you in a bad financial situation from day one. Start small. As your business grows, look for a larger space, bring on new faces, or consider opening a second location.
By letting your business grow naturally, you can focus on growing the business in the long-term. This helps you to avoid cutting corners to get customers fast, in ways that prevent them from being lifelong customers.
4. Ignoring the Franchisor
There’s a reason franchisors exist. They’ve done all the behind-the-scenes work to determine what will help their specific business succeed. Then they’ve taken all their knowhow and packaged it for you to use and make money.
Ignoring the insights and best practices they developed will put you on the fast track to failure.
To avoid falling into this trap, research potential franchises before singing on. Learn whether you’re comfortable with a franchise’s approach to business. Don’t like what you find? Move on before dropping any cash.
5. Focusing on the Wrong Stuff
Franchises give franchisees various levels of freedom. Maybe you can install a fireplace in your location if you want. Or maybe you get to pick the color of the tile floor. Whatever freedom you have, don’t let it go to your head. Learn to make decisions and move on.
When building out your franchise, stay focused. The main goal is to serve customers and make money so you can pay your team well. You meet these goals by providing an inviting atmosphere and having your doors open for business.
Do this as efficiently as possible. Decide you should have gone with a different color carpet? You can change it later.
6. Being a Lone Wolf
When you buy into a franchise, you’re starting a business. But you should never think you’re on your own. In addition to the franchisor, your fellow franchisees are fantastic resources. Use them to find success!
Having trouble recruiting quality employees in your area? Ask another franchise owner nearby how they do it. Thinking of opening a second location? Consult the other franchise owners in your area to find out if they’ve done any research on the possibility and whether they feel your decision is sound.
In fact, it’s a good idea to consult current franchise owners before investing in a franchise. This way, you get a real-life picture of what your life will look like should you buy into any given franchise.
7. Not Investing Sweat Equity
Opening a franchised location is probably the quickest way to launching a new business. That said, quick doesn’t mean easy. If you expect to walk into a franchise and have it run itself, you’ll quickly learn how wrong you are.
From day one, your franchise will require your blood, sweat, and tears. Running it well may mean putting an apron on one day, running numbers the next, and handling customer complaints every day.
If you’re a good manager, it will run smoothly soon enough, and you’ll be able to take vacation without worrying. But there’s no franchise that you can open and ignore, while money continually floods your bank account.
So before you sign up to open a franchise location, be ready to put in the work necessary to make it succeed.
Otherwise, your business will join the many that fail.
The Right Franchise Reduces Your Risk
Wish there was a franchise opportunity that minimized upfront costs, provided unparalleled support, covered your online marketing, and took a flat fee instead of a percentage of your income? There is—Fit Body Boot Camp, the anti-franchise franchise.
Best part? You don’t need a fitness background to get started, and many franchises are profitable within the first few months. Take a peek to learn why Fit Body Boot Camp remains the fastest growing fitness boot camp franchise in the world.
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Find out Why Fit Body Boot Camp is The Best Franchise Opportunity