These Are 6 of the Biggest Challenges You’ll Face As You Build a Franchise

Starting your own business is always exciting and nerve wracking, but building a franchise has a whole new level of challenges that you must face before it becomes successful. Franchises are built on someone else’s name that has already been proven a success, but that does not mean your branch will automatically experience that same level. It’s a process, and like any process, it has to be done right.

As you build a franchise, you are going to face multiple obstacles that you have to overcome. There’s no point in reinventing the wheel to do so, though. Most of these obstacles have solutions that have already been documented by other entrepreneurs who have been down the same path.

Preparation is key as you begin your new career as a franchise. Once you know the problems you may face, you can research possible solutions and be ready to face them when they happen instead of being blindsided. Here are 6 of the biggest challenges you will face as you build your franchise.

6 Challenges Franchise Owners Face as They Get Started

1. Any business investment involves risk and capital, but franchises are extra pricy.

When you start a business, if it is undercapitalized there is a lot of room for problems to arise that you can’t afford to fix. However, franchises require you to put out a lot of cash upfront just to be allowed to break ground with the brand’s name. This maximizes your risk potential if your business does not take off as you would have hoped.

Franchisors mitigate that risk somewhat by being picky about who they allow opening a chain with their name on it. The approval process is very complicated and choose. You must be financially sound and have a minimum net worth in order to expand off of a franchise. The requirements are even more strict than that, but those are the first set of criteria. If you don’t meet those basic standards, you shouldn’t both trying for a franchise license.

2. It’s a real commitment.

Owning a franchise is not a 9 to 5, or even 9 to 9, job. You have to be there running and overseeing every aspect of the show, especially at the beginning. Many franchise owners either have no close family to split their time with or, if they don’t balance their schedule well enough between work and their personal life, they end up having problems with their families.

3. Your staff may not be as committed as you are.

The number one problem non-economic problem that business owners complain about is not being able to find good staff. While this is true across the world, for some reason many people are even less inclined to work hard in a franchise.

One of the reasons that are surmised for this is that employees assume that a multi-billionaire conglomerate who doesn’t need the money owns the restaurant, not realizing that it’s actually just you and a lot of risk and responsibility resting on your shoulders.

4. Government rules and regulations.

Research shows that most of the stress of business owners is based on government rules and regulations. Franchises get an extra burden of this stress pie, and as a franchise, the burden is yours.

Be prepared to deal with business income taxes and complex tax compliance rules, not to mention regulated healthcare and other benefit structures.

5. Your community may not be quite right for your business.

Before you even start thinking about building a franchise in a specific community, you need to do some serious research. After you break ground is not the time to realize that your amazing franchise is not going to do well with the clientele that is readily available.

For instance, a high-end designer brand should not open in a rural town with a low population and low socioeconomic status, but they might do well in a bustling city with a middle-to-high average income population. On the other hand, if there are too many businesses that are considered your competition already in the area, you may want to adjust your plans and try somewhere else.

6. You don’t get to make your own rules.

You may be an entrepreneur and a small business owner, but when you own a franchise, you have rules that must be followed beyond your own ideas and plans for how to run a business. This means you have to give up some of your autonomy.

The level in which a franchisor steps in and mandates the way you do business is not the same in every franchise. There are usually hard limits – policies and procedures that have to be the same across every franchise opening in order for customers to know what to expect.

In restaurants, this usually means that you have to have your ingredients purchased from a designated supplier, offer the same menu items, and have comparable prices to the other chains. In clothing retail stores, it would mean that you have to offer the same brands as the other stores and have your franchise set up to have a certain look. Every store is different as far as the requirements for aesthetics, employees, and the overall makeup of the franchise.

But some policies or procedures are negotiable, as long as they don’t affect the value of the brand itself or the integrity of the business’s name. If this happens, you can expect your franchise license to be revoked and all of your hard work to go down the drain.

Franchises Come With Lots of Challenges and Lots of Successes

Once you know what to expect and come up with a game plan of how to tackle the obstacles in your way, you can open your franchise and begin the process of becoming successful. If you make it through the usual struggling open business stage, franchises have more potential of staying successful long-term and bringing profitability to the franchise than other small businesses.

Don’t be afraid of the challenges – be excited about your successful future!