7 deadly sins of a franchisor
The article talks about some of the franchisor's gross mistakes, which pose a great danger to the entire franchise network. For clarity, each error is indicated as a quote.
"Just as all happy families are alike, each unhappy family is unhappy in its own way." So it is in franchising: successful franchises are similar to each other, while the problems of unsuccessful franchises are very specific. Nevertheless, let's try to identify the actions and conclusions that invariably lead the franchise founder to failure.
"The franchise business is not our business" - this is a mindset that can destroy any franchise network. It means that the parent company deliberately puts its interests above the interests of franchisees and the entire network as a whole.
"Let's get the lump sum fee, and then we'll see." This is how often entrepreneurs think that franchising is mainly quick money on lump sum fees. They will certainly be disappointed, because in return the partner expects to receive support and guidance. If he does not receive what he expects, perhaps this lump sum fee will be the last profit of the network.
"Let them do whatever they want." This phrase appears when the franchise founder does not think "prospectively" and is focused on getting immediate benefits. In my memory, one fairly large fast food franchise agreed to add shawarma to its menu. Just imagine, American food with hamburgers and fries was next to shawarma. The result: we expect that the next franchise buyers will look at the network with apprehension with such "rules", and the audience of the cafe itself will be unpleasantly surprised.
"Let's get the lump sum fee, and then we'll see." This is how often entrepreneurs think that franchising is mainly quick money on lump sum fees. They will certainly be disappointed, because in return the partner expects to receive support and guidance. If he does not receive what he expects, perhaps this lump sum fee will be the last profit of the network.
"Let them do whatever they want." This phrase appears when the franchise founder does not think "prospectively" and is focused on getting immediate benefits. In my memory, one fairly large fast food franchise agreed to add shawarma to its menu. Just imagine, American food with hamburgers and fries was next to shawarma. The result: we expect that the next franchise buyers will look at the network with apprehension with such "rules", and the audience of the cafe itself will be unpleasantly surprised.
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"Let's put what they want in the contract, as long as they pay the money" - this is a very common mistake of the franchisor. It seems that one clause of the contract is so insignificant, and the temptation to stick a new flag on the map is very great. In the end, a problematic partner with a weak contract is signed, which is used at any contradiction.
"Why argue with them - just fine them" - I have never seen a problem-free fine from the franchisor. A fine is always a confirmation that the ability to conduct a partner dialogue has been lost, and almost always a fine means the closure of the partner's point. A wise franchisor will not resort to fines and sanctions without good reason.
"Let's give the partner a loan." The partner himself acquires and pays for the lump sum fee, equipment, personnel, and premises. If for some reason he does not have the funds for this, you are not on the way. Almost always, the lack of funds will "surface" in the future, and you will not only lose your partner, but most likely will not return the debt. The conclusion is simple: not enough money for business - it's not time to start a business yet.
"Let's sue our franchisee" is a very bad idea, because a competent founder does not sue his partners, he knows how to work with them, how to get out of problem situations, how to be a leader, in the end. Usually, franchises that are in the process of litigation with their partners have no future, with a few exceptions. If there are lawsuits and courts, then there are problems in the organization of work within the franchise itself or in the selection of franchisees.
"Why argue with them - just fine them" - I have never seen a problem-free fine from the franchisor. A fine is always a confirmation that the ability to conduct a partner dialogue has been lost, and almost always a fine means the closure of the partner's point. A wise franchisor will not resort to fines and sanctions without good reason.
"Let's give the partner a loan." The partner himself acquires and pays for the lump sum fee, equipment, personnel, and premises. If for some reason he does not have the funds for this, you are not on the way. Almost always, the lack of funds will "surface" in the future, and you will not only lose your partner, but most likely will not return the debt. The conclusion is simple: not enough money for business - it's not time to start a business yet.
"Let's sue our franchisee" is a very bad idea, because a competent founder does not sue his partners, he knows how to work with them, how to get out of problem situations, how to be a leader, in the end. Usually, franchises that are in the process of litigation with their partners have no future, with a few exceptions. If there are lawsuits and courts, then there are problems in the organization of work within the franchise itself or in the selection of franchisees.
These are the main 7 sins of a franchisor. Naturally, this list can be supplemented and expanded. Here are the brightest and most common misconceptions and mistakes of franchise founders.