Common Franchisee Mistakes—and How to Avoid Them

Even though franchisees pay to be part of a system, sometimes they lose their way. Below, I highlight a few of the mistakes that franchisees often make. Typically, they happen unconsciously and over time. My advice is to take these ideas and make sure you stay on the right side of each one. Franchising works when everybody works together.

They want to change the business

Franchises are built on a proven model which will innovate and change over time. If a franchisee wants to modify the model along the way, they should very carefully discuss this and share their ideas with the franchisor before they implement any changes. There are typically good reasons why a system is built the way it’s built. With any brand, there’s a lot that goes into the business model and good reasons why things are the way they are. If a franchisee makes changes on his own at a local level, he runs the risk of impacting the model system-wide. Instead of trying to change the business, talk about what you’d like to change with the franchisor. Ask for input and to possibly develop a test environment. Your idea might work for you but not for others in the system. It might work in a new store, but not an old one. Consider the whole system-wide impact before you implement anything new on your own. Be a smart franchisee and stay close to the franchisor.

They stop participating in the system conferences

System conferences are a great resource for the franchisees. They offer a perfect opportunity to learn and share best practices. It’s a wonderful way to network with other franchisees who are in the exact same business. Most conferences have guest speakers and providers who share new ideas, motivation and innovation on various topics, from customer service to leadership to business ownership. Franchisees can meet with exhibitors, vendors and suppliers to the brand and get new information on new products and services. By participating in the system’s conferences on a regular basis, even old dogs can learn new tricks. Attending conferences is a very important—and usually really enjoyable—investment for your franchise business.

They keep to themselves

Franchising really is a team effort. The lessons you can learn from other franchisees are incredibly valuable. Go visit fellow franchisees when you’re traveling. Talk to them on a regular basis. Invite them to come visit your location when they’re nearby. Take pictures of their business so you remember what you saw.  Stay connected and stay open to new ideas. Franchisees can help each other in so many ways.

They let financials go

Franchisees sometimes get so busy running the day-to-day that they let go of the accounting or bookkeeping because it’s not exciting or something they really enjoy. Most people don’t invest in a business to manage the payroll and accounting aspects, but it’s a necessary part. If you let your financials go, and you let the bank account reconciliations go, you won’t produce meaningful financial statements on a regular basis and run the risk of running out of cash—or worse.

Generating useful, accurate and complete financial statements on a regular basis is a fundamental requirement of being a successful business owner. Franchisees have an added bonus of corporate support. They can use a franchisor’s standard chart of accounts, get advice, and then learn how to handle certain transactions and manage the accounting that’s needed.

I would also suggest you send your financial statements to the corporate office for feedback and suggestions. Franchisors have benchmarks, target numbers, or financial ratios that work best in the most successful locations in the system. You can use this information to compare and learn to improve your profitability and cash flow. It also is a direct correlation to improving the value of your business over time. Strong, complete financial information gives you a much better way to manage the business.

They forget they are part of a system

You might be doing great things in your business, but don’t forget to stay connected to the franchisor and the other franchisees, suppliers and vendors who provide products and services. Franchising is best done with a collaborative approach where people help each other achieve higher levels of success. If you stay isolated and keep your great ideas to yourself, or keep your struggles to yourself, you’re defeating the purpose.

The best thing you can do is share what works and what doesn’t work with others in your brand so they can help you overcome any obstacles—and take advantage of any opportunities—that you might not be aware of. I’m a big fan of peer groups for franchisees. If your system offers these, I suggest you join and participate. Peer groups are a secret weapon to increase accountability and performance over time. It’s beneficial for all involved.

Taking advantage of all a franchise system has to offer is the best guarantee for franchisee success. After all, isn’t that why you were interested in a franchise in the first place?

John W. Francis has more than 30 years in franchise industry, as both a franchisor and a franchisee with multiple brands. Contact Johnny at john@johnnyfranchise.com or check out his website at  www.johnnyfranchise.com