Franchising - How Could It Fail?

While franchising is widely recognized as a beneficial method of running a profitable business, there are occasions when a franchise does not achieve the success it is expected to. There can be various reasons for this. Some of the primary ones include:

  • Unrealistic Expectations: It is very natural for new franchisees to have very high expectations for their business. However, most franchises in the case of new businesses might take a few years before turning a profit. It is therefore essential to plan accordingly for the franchise to stand a chance.

  • Marketing Plan: While well-established and reputed franchisors might help their franchisees with funds and training for implementing marketing and advertising plans, small time franchisors might not possess the funds for this. Since marketing plays an important role in the success of a business, it is the franchisee’s responsibility to ensure that they choose a franchise according to the resources available to them.

  • Popular Appeal: It is absolutely essential that a franchise is accepted by the public and the product is well liked and accepted for it to succeed. If the business is one that cannot be easily duplicated, then the franchise is most likely to fail. Most franchises are designed so that they are easily duplicated.

  • Heavy Competition: it is imperative to choose a concept that is unique and has scope for expansion. Otherwise, the franchise may succumb to pressure from competition.

The primary stakeholders of a franchise must take these factors into consideration before even embarking on a franchise.