Some reasons for the failure of franchisees

The business model of franchising is indeed commonly called “royal road of independence”, but it is not a panacea against the risks of self-employment. The following items will now be examined the main sources of problems.
Which are the main reasons that can most often cause problems when starting their own business. At worst, the ambitious new entrepreneurs are even at the very beginning, when their dream of independence marks the end.

Certain key factors in the success or failure of a business – taken from

Although the risk to fail with a franchise system, is much lower than the opening on own business but you are not protected from future franchisee margins in the foundation phase. Therefore, read the following statements:

Deficiencies in the funding

It is relatively easy to understand why defects in the financing are the main reason for the failure of start-ups. Firstly, the actual capital requirements into business with planning often underestimated and the other are rarely reserves formed (often simply a lack of capital). When unforeseen occurring special issues (e.g., for a new company car, etc.), the young company quickly fall into an economic imbalance.

The following costs should be borne in planning a store opening necessarily in mind:

  • Operating expenses (equipment, office supplies, telephone, travel, vehicle costs, labour costs, material costs, etc.)
  • Private cost of living
  • Health insurance (private or public)
  • Pension insurance (private or public)
  • Unemployment insurance
  • Other costs (instalment loans, alimony)

Lack of information

Deficits in this area can be both at the start-up itself and its partners. An example of a lack of information that the founders has to represent, for example, would be an inadequate for a market research as and in preparing the way. A company, which is founded on false premises, might get enormous problems: For example, when it comes to the size of your target audience. It is very likely that you to plan your sales figures too high. Instead, think of the situation in the worst case, because you can have difficulty in repaying the loans.

Franchising: What you need for a home office

Let us start from the equipment:

  • Desk and office chair
  • PC with internet access, printer and external hard drive (for backup)
  • Telephone with answering machine, fax machine
  • Storage options
  • Writing materials (block, notes, pens, storage baskets)

During the actual purchase of your furnishings and objects of labour is worth early keep my eyes open and look for good deals. Do an Internet search for furniture stores locally; there are some very good offers.

What should you look for when buying?

Especially, that which you like and is fit for you. A too colourful “style blend” is mildly irritating and unprofessional.

With desk and office chair, you should go “quality over price.” In your company, you are the most important tool.
Meanwhile, the Internet offers some good opportunities for related office furniture second hand. Use may also be the consequences of the economic crisis and browse through the daily newspaper for company resolutions. Sometimes these turn out to be true “treasure trove” for office equipment (especially with filing cabinets and storage organization – rather than new purchases can become costly).

If you decide to enter into a franchise partnership, it may be that the part of the establishment of your office “franchise package” is. In this case, you quite a bit of searching and procurement effort will be spared.If you are interested in the management of his own company, you will find direct franchise and other interesting information on the topics of entrepreneurship and self-employment. We hope that you could see this article useful information.

Another important tip: Collaborating with your partners

You bake in the beginning the proverbial “small bread roll”. Test the viability of your concept carefully. The collaboration quickly will show you the weaknesses. Pick up a lesson from them and try to improve your performance. Only through many perseverance and patience, you will be able successfully develop your business.

Franchise Planning Tips

The budget planning:

How much money you can afford to build your franchise system?
Develop a precise liquidity and investment planning
Try now to determine the fees to be incurred later for your franchisees.
Please look for savings to reduce the incentive for potential franchisees to increase.

The planning of operations:

Segmenting your operations in the smallest possible sub-steps (so your content will be more easily employable) and listen mainly to the fact that without exception, all processes that are important for the daily operations of your franchisees, can be carried out regardless of your actual corporate headquarters.

The Franchise Handbook:

Here you describe your business philosophy, your strategic goals, and the essential characteristics of the type of business, its success factors, its “tools”, the operational structure and the rules of a conflict-free cooperation. The Franchise Handbook is both a documentation your corporate identity and can form collections; training materials, etc.

The appropriate franchisee:

My business idea requires knowledge and qualifications.
What is the ideal franchise partner of for me?
What is the minimum investment for my franchise system, how much the potential partner to raise themselves?

The test run:

The first operation, which was aligned with your business idea is, you both as a business card and as the other as proof that your business idea actually works.

The franchise agreement:

Here you create the legal basis for your franchise. The following elements should be regulated among others in your franchise agreement:

  • The rights and obligations of the parties
  • The scope of the freedom of your franchise (how much is set in the franchise manual and can decide how much of the franchisees themselves – for example, interior design, menu etc.)
  • Term and Termination
  • Pricing and purchasing terms (how the franchisees in the selection of its suppliers has a say?)
  • Which territorial protection is guaranteed the franchisee etc.?

These and other questions need to be addressed in the franchise agreement. To be on the safe your business, and to avoid future problems, it is advisable to have a contract drawn up by a lawyer, which has experience in franchising and who can advise you.