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.