Major reasons for franchise failure
Franchise business is a proven method of selling and has proven itself as being a good business strategy for growth. However, we have seen a lot of franchising businesses fail. The mistakes could be on the side of the franchisor, or franchisee or it could be due to a wholly external reason. Let us analyse some of the major reasons why franchises fail:
• The franchisors could go wrong in their franchising business strategy • Wrong vision and planning for the future of the business • Poor relationship between the franchisor and the franchisee • Lack of clear understanding of the business • Taking the plunge without doing market research and forecasting • Failure in motivating and managing the franchise network • The franchise might not be the right business for you • Mistake in selecting the geographical location for the franchise outlet • The attitude of “business for business’ sake” will not help in franchising • Lack of product quality • Inefficiency, lack of leadership qualities, lack of attitude towards growing the business, be it the franchisor or franchisee • Wrong selling tactics and lack of customer satisfaction • Fraud, misrepresentation and other malpractices • High competition from other franchisees of the same company and other business as well
Keeping in mind the possible pitfalls and working towards avoiding them can help most franchisees from failure in their business.