6 of the Most Common Franchise Operator Mistakes to Avoid

Tips For Setting Your New Franchise Up For Success

As a brand-new franchise operator, becoming a business owner and running a franchise can be daunting without careful planning and consideration. Quite often, new franchisees fall into some common franchise traps and end up making costly mistakes that can be easily avoidable with the right guidance.

To help you avoid these all too common pitfalls, we have compiled the top 6 mistakes franchise operators often make and explain how you can set yourself up for success.

6 Mistakes Franchise Operators Often Make and How to Avoid Them

Running a business comes with a unique set of challenges that must be overcome in order for the business to be successful long-term.

While operating a franchise is typically less challenging than starting a brand-new business from the ground up, there are still several obstacles that a new franchisee must navigate.

Some of the most common mistakes franchise operators make, including:

1. Failing to Use the Franchisor’s System

Franchisors have set rules, systems, and procedures in place to ensure consistency across all franchise locations. It’s important to remember that these procedures are in place for a reason. Failing to implement them can lead to reduced quality in customer experience along with numerous other issues that can hurt your franchise business financially.

Also keep in mind that deviating from the franchisor’s rules, systems, and procedures is considered a violation of your Franchise Agreement. This means that the franchisor can sue you for damages or lost royalties.

2. Not Planning Things Out Properly

When embarking on a new business venture, developing a long-term plan for success is absolutely critical. Winging it is not an option. Such a plan should include:

Target monthly and annual revenue
Required profits
Expense numbers.

A well-thought-out plan not only helps you stay on track and ensure you are meeting your targets but also leads to higher profits and long-term success.

3. Not Accessing Support From the Franchisor

Franchisors typically offer ongoing guidance to their new franchisee, including, but not limited to:

Marketing
Training
Logistics

As a new franchisee, the franchisor can provide you with expertise that you may not have, so it’s important that you take advantage of these resources to ensure your business thrives and is financially viable.

4. Expecting Too Much from the Franchisor

However, it’s important to understand that this is just a basic framework designed to help you get your business on its feet. The franchisor will not be doing any heavy lifting and helping you ensure your business remains profitable. That part is up to you.

5. Not Working with an Experienced Franchise Lawyer and Consultant

Your first step as a new franchise operator should always be to consult with an experienced franchise lawyer. A lawyer not only will offer guidance on your legal obligations as a franchise operator but will also go over your Franchise Disclosure Document along with other important paperwork and help you understand what you are agreeing to. These documents are incredibly complex and require years of legal experience to properly understand the contents. A franchise lawyer has the knowledge to help you identify:

How strong the trademark is
Territorial protections
Growth potential

6. Choosing the Wrong Franchise

Choosing a franchise is a major decision that shouldn’t be taken lightly. Often, new franchisees choose a franchise for the wrong reasons. Maybe they’ve always been a fan of a particular fast-food restaurant or they pick a franchise that they think will make them the most money without doing additional research.

Either way, it’s important to do your research not only when it comes to the franchise itself, but the community you plan on operating in and your target customer base.

While a franchise may be incredibly popular in a neighbouring community, in your area consumers may already have a similar franchise to which they are loyal too. This is incredibly important to know before signing a franchise agreement.

Tips For Setting Yourself Up For Success As a Franchise Owner

Make Sure You Have Enough Money

Opening a franchise is expensive, and it’s important that you have more than enough funds set aside to get set up and cover unforeseen expenses.

One way to know whether a franchise may be financially possible is to calculate your net worth. This will help you determine your budget going forward.

It’s important to note that there are three major fees involved with setting up a franchise. This includes:

The initial fee
Royalties
Marketing fees

Royalty and marketing fees will be determined based on your sales and revenue, but initial fees will be a set amount that must be paid upfront. The initial fees can range from $10,000 to $100,000.

Choose the Right Franchisor

As previously mentioned, it’s crucial that you choose a franchisee very carefully and do extensive research before entering into any franchise agreement.

Here are some tips to follow when choosing a franchise:

Choose a franchise whose business you are interested in
Choose a franchise that offers its franchisees lots of ongoing support
Look for a company that shares the same values as you
Choose a franchise that will be profitable
Consider how much money you have to invest
Consider how involved you want to be in the day-to-day operations
Understand a franchise’s processes, rules, and restrictions
Look into closure rates
Talk to other franchisees

Consider Franchising With Gorilla Bins

Are you a prospective franchise operator looking for the right franchise to partner with? Considering partnering with Gorilla Bins.

Gorilla Bins is Ontario’s leading waste management business with several locations across the Greater Toronto Area. We’ll teach you everything there is to know about what we do and offer extensive training and support to help you succeed with your franchise.