Franchising continues to be a very popular and successful way for businesses to grow as it helps address the growing pains associated with human and financial resources as well as providing greater commitment and focus from the people who operate individual business units.

However, like any aspect of business there are common pitfalls that franchisors fall into which prevent them from achieving the growth that they were chasing.

The four most common ones are:-

1. Not understanding the customer

Not understanding the customer. Franchisors must appreciate that franchising is only a distribution mechanism. Franchisors are not in the business of franchising they are in the business of serving a customer and the way they do this is via franchisees. It is essential that franchisors understand why a customer buys from them, who the customer is and how the customer makes its buying decision. This knowledge means enables a franchisor to meet the needs of customers in relation to product, price, promotion and place and hence attract customers to franchisees.

2. Poor Systems, People and Processes

One of the key ingredients to the success of any business is uniformity in its contact with customers. A customer should not know whether the person they are speaking with or the place they are visiting is a company or a franchisee. How consistent and therefore ‘uniform’ a particular franchise brand is across a network is dependent on the quality of the systems, processes and tools that a franchisor provides to each of their franchisees in the form of Operating Manuals, training, induction, marketing collateral, etc.

The systems people and processes also need to provide the supporting infrastructure that a franchisee needs to operate, monitor and drive their business. This level of support is usually not that different from what a non franchised business would need to support its growth. However, often a franchisor does not invest in the support required with the result that franchisees are inhibited in their ability to run successful businesses.

3. Setting unrealistic expectations

In the desire to secure franchisees, new franchisors sometimes get carried away with sharing optimistic revenue and profitability projections or under stating establishment costs. These might be based on fact but be optimistic because they do not apply to the territory or demographic that the franchisee might be considering. It is vital that any information that is provided to prospective franchisees is based on sound research and fact and that the franchisee is aware of the potential limitations of the information that is provided.

4. Compromising on the quality of either sites or franchisees

This is probably one of the biggest pitfalls. Again in the desire to grow quickly, some franchisors accept franchisees who do not meet their ideal criteria or even worse franchisors don’t know their ideal criteria. A wrong decision in franchisee selection can harm your brand, affect other franchisees, create an enormous waste of a franchisor’s resources in dealing with the problems of the franchisee and potentially litigation.

The adage that should be followed is grow fast, but safely, is critical.