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6 Mistakes to Avoid if You’re Franchising Your Business

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Are you thinking about franchising your business? It can be a great move, but franchising is also fraught with risks that can leave you with nothing but headaches and considerable losses.

If you have a successful company and are thinking about expanding through franchising, it’s in your best interests to consult with a franchise law attorney. You need to know exactly what you’re getting yourself into to create a business model that’s fair to all parties.

The lawyer will explain the ins and outs of the franchisor-franchisee relationship. You’ll get the sort of counsel that’ll help you make informed decisions that increase the chances of success.

If you’re thinking about expanding, avoid these six franchising mistakes at all costs.

1. Franchising Too Soon

One of the biggest mistakes you can make as a business is franchising too soon. You need to ensure you have your business model down pat, conduct sufficient research to verify that expansion is viable, and work out the logistics that can make or break your plans. If you launch a franchising plan prematurely, you and your franchisees could end up the worse for wear. It’s best to do your research and prepare properly before launching a franchising strategy.

2. Failing to Treat Franchisees Like Equals

Another mistake to avoid at all costs is failing to treat your franchisees with a proper level of respect. While you might be the franchisor, that doesn’t mean your franchisees are less than.

Yes, they report to you and owe you some of their proceeds as per the franchising agreement. But the individual franchisors are owners, too. They’re independent contractors who own businesses — and your success depends on their success.

So, you’ll want to establish and build positive business relationships over the long-term period with your franchisees. You and your franchisees are business partners. There should be mutual respect from all parties since each party is essential to the other’s success.

3. Neglecting to Resolve Problems

When issues emerge, you need to identify and fix them as soon as possible. Otherwise, there could be a negative domino effect that ends up doing damage to your franchising operations. Whether the problems have to do with franchisor-franchisee relations, logistics complications, or other things, you need to resolve them right away. Ignoring prolems will only make things worse.

4. Refusing to Share Business Secrets

If you’re a good franchisor, you want your franchisees to suceed. It’s a win-win since their success will benefit you as well. So, don’t jeopardize the success of your franchisees by withholding business secrets that can help them be more successful. You’ll want to share with them as much as you reasonably can so that they expand profitably and financially responsibly.

5. Making Decisions Without Seeking Counsel

Speaking to a franchise law attorney isn’t just a good idea before you start franchising. You should also speak with one whenever you encounter problems and need advice. It’s essential that you make decisions that are lawful and fair for all parties involved.

So, meeting with a franchise law attorney when you have questions about how to handle specific situations is a good idea. The other option is to make decisions without seeking legal advice and potentially making mistakes that undermine your franchising strategy.

6. Failing to Invest Enough Capital

After doing your research, you should know how much capital you need to invest per franchisee. You should only add new franchisees as you’re able to come up with however much you need to invest in the franchisee’s operations. You won’t get the returns you and your franchisees expect if you’re not investing a sufficient amount of capital into these businesses.

You’ll want to avoid these types of mistakes when the time comes to start franchising. Knowing how to go about things the right way is the first step toward succeeding as a franchisor.

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Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.
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