As a franchise consultant, a question I commonly hear is “What mistakes are frequently made when you franchise your business?” Here are some blunders to avoid when you franchise your business:

  1. Selling a franchise just to generate money
  2. Ignoring prospective Franchisee red flags
  3. Franchising your business simply to get out of a financial hole
  4. Spreading franchises too far apart
  5. Not getting to know the prospective Franchisee well enough
  6. Overselling your franchise opportunity

In my previous blog, I addressed mistake five above: Not getting to know the prospective Franchisee well enough when you franchise your business.  In this blog, I will address mistake six.

Overselling your franchise opportunity when you franchise your business:

At National Franchise Associates, we recommend you go slowly when you first launch your franchise program. When you franchise your business, determine in advance how many franchises you want to sell your first year of franchise operations. Stick with your plan.

Here are our top two reasons for starting out conservatively when you franchise your business:

  1. When you franchise your business, you have to learn how to be a Franchisor. While a good franchise consultant can prepare you in this area, you must learn what works and what doesn’t work for your particular industry and franchise program. When you franchise your business, it is best if you work out your issues with one or two franchises rather than several dozen.
  2. Avoid overselling your franchise!When you franchise your business, the Franchisor’s income is often primarily derived from Franchisee service fees and Franchisee purchases from the Franchisor. When you franchise your business, you must sell at least one franchise and get it open in order to start earning service fees. Therefore, at the outset of their franchise programs, most Franchisors do not hire full time personnel. Rather, new Franchisors typically rely on themselves and the employees in their company-owned locations to provide the services promised to their Franchisees, such as site approval, training, pre-opening assistance and field support. Limiting the number of franchises sold initially ensures that you and your team have adequate time available to service the new Franchisees in addition to your on-going duties in the original company. Following this strategy allows you to avoid spending money on salaries for full-time employees in your franchise company who you cannot fully utilize. Typically, in franchising, the ratio is one full-time field rep for every 20 franchise locations.

Thinking About Franchising?

NFA Franchise Consultants have the experience to help businesses franchise.  Just watch and listen to some of our client case studies and video testimonials.  We can HELP YOU and it doesn’t cost anything to call and talk to us! 

So, if you are still asking the “should I franchise my business” question over and over with no clear direction, give us a call at (706) 356-5637, or contact us through our online form.  We look forward to helping you take your business to the next level and beyond.