7 Risks of Franchising Your Business: Avoid common franchisor pitfalls

By Starting Franchise on
Wooden Mousetrap: Franchise business risksFranchising is great for expanding your business, they say. What are the downsides of a franchise business? When should you not take the risks of franchising a business? It is very important to note the possible pitfalls of a franchise business; we're going to help you on that before you jump into your business venture.

Bottomline: the popular saying is equally true about franchise businesses too: look before you leap!


7 risks of a franchise based business to look out for

  • Hyper Optimism: Optimism is good for your business, unless it crosses the limit. Are you over-assuming the number of franchisees to recruit? Does your business have that much popularity to be franchised in the first place? This is easy to say to say but hard to practise, because only you can figure out when you cross the limit of optimism about your franchise business.
  • Complex Business Model: A complex business model is not an ideal venture for franchising. Any franchise business should have a very simple business model, because to put it in plain language, you must create interest among other people about your business as well as make them understand how to run the show and make profits.
  • Under estimate of cost: Your cost is always going to exceed your paperworks. Prepare for it. Estimating your franchising budget on paper is one thing, implementing it and running the show is another. Your expenses may rise, and your profits may go down. Situations may compel you to reconsider franchise or royalty fees. Bottom line, things are volatile, and you should be ready to withstand them. A stable franchise based business model should still run smoothly even if half of its franchise units shut down.


  • Ignoring Education: Running a good franchise business is not a cakewalk. A good franchisor has his or her skill sets, experience, theoretical knowledges, and practical experiences. Even in the franchise business, a good education is the best possible investment. We suggest you to visit our Franchise Classroom section where you can know about the best Franchise business books, keep track of latest franchise news 24×7, and read franchise business articles.
  • Ignoring Franchise Experts & Professionals: This is a very common mistake of starting franchise businesses and may poise great risks. Franchise business experts and professionals are there for a reason, and they should not be ignored. People are often penny wise but pound fullish in this matter. They try to save a few bucks on franchise experts and ultimately make wrong decisions and lose more money. A good franchise business consultancy, on the other hand, can pay long lasting benefits. Do listen to franchise consultants and experts, we repeat!
  • Ignoring Hard Work: Franchising your business does not mean end of all the hard works you have put to establish your business in the first place. I would even go on to say that franchising your business means even more hard work to come!

And here comes the deadliest risk of franchise business.

You spend all your money to develop your franchise business, but it does not succeed.

Why, you might ask, is this a special risk for franchise business? The risk of a bad investment not giving profit is always there in any business, let apart franchising. True. Nevertheless, in a franchise business, the set-up costs are usually higher than normal business ventures, which makes an eventual loss even greater.

Remember: Good investors chase profit. Great investors minimize risks.



Ajay Dubey said...

Dear sir
I a man looking for small franchise business in Gorakhpur, Uttar Pradesh, India
Please help me to find best company franchise for me as per my location.

Post a Comment

NOTE: All comments in Starting Franchise are manually moderated. Feel free to discuss all aspects of franchise businesses in India, investments, requirements, ROI and other details. Nevertheless, while your critical thoughts, queries, note of thanks and all other constructive comments are highly appreciated and encouraged, we vow to keep the web spam free. Absolutely NO SPAM is allowed, including promotional links to your blog or website.

We appreciate formal writing with correct grammar and spellings. Comments in SMS language and incorrect spelling or grammar will be deleted, irrespective of their relevance or quality.

Didn't find what you were looking for?

Please visit the home page of Starting Franchise, or browse through all franchise business opportunities in India. You can also consider using the search box below. Choose more targeted, specific search queries to get more accurate results.

NOTE: Search results will open in a new tab.

Stay Connected, Stay Happy!

We, at Starting Franchise, would love to hear from you. Post us your queries, feedbacks, grumbles, complaints, advices, suggestions and whatever else you want to convey. Connect to our Google Plus or Facebook Page, or shoot us an email; and we will be glad to revert back!

Is something wrong?

Did you just notice copyright infringements, broken or useless links, illegal and unsafe materials, adult contents, pay-to-click scams, hateful and racist content, comment spam or something like that, or any other garbage or gibberish you would love us to take down, or pay attention to?

We would love to have your help. Please email us immediately if you see any such content. Alternatively, please visit the Contact Us page of Starting Franchise.