What Are the Challenges Faced by Start-up Franchisors?

Start-up franchisors face numerous challenges but they can all be summarized in one phrase: They need to learn how to become successful franchisors. They must master their new tasks and responsibilities and all that it entails to be a successful franchisor. Most franchisors learn as they go; some are smart and look for information, mentoring, and guidance from those who have been there before them and from experts or coaches. Others, unfortunately, don’t ever bother to learn and end up having problems that could have been avoided seeking guidance and having less pride.

The most important areas of learning for new franchisors are:

  1. Franchise Recruiting
  2. Franchisee Training and Support
  3. Franchisee Relations and Communications
  4. Legal Aspects and Compliance
  5. Innovation.

There are traps in each of these areas that new franchisors must learn to avoid.

1.   Franchise Recruiting

  • Not having a growth plan. 
  • Making earning claims intentionally and unintentionally.
  • Thinking that the best franchisees are just like them.
  • Selling instead of granting franchises.
  • Not developing and following a system for recruiting franchisees.

2.   Franchise Training and Support

  • Forgetting all they had to learn and to go through in order to get to where they are today; thus having no patience with franchisees.
  • Leaving franchisees to fend for themselves.
  • Believing they are good trainers just because they know the subject.
  • Not using the OPS Manual as their training text, teaching from notes that never make it to the OPS Manual, and ending up with outdated manuals.

3.  Seeing franchisees’ requests for support as a bother.

  • Finding the balance between over and under supporting franchisees.Franchise Relations and Communications. 
  • Talking down to franchisees.
  • Assuming a position of power.
  • Not leading by example.
  • Learning that each franchisee has a different communication style and needs and addressing them as people, not as numbers or locations.
  • Creating the systems that can enhance communications.

4.   Legal Aspects/Compliance

  • Creating a relationship that is all about the legal agreement and not considering the human partnership.
  • Making operating decisions that go against the franchise agreement.
  • Not been consistent when implementing compliance systems.

5.   Innovation

  • Inability to let go of the day to day duties to take care of the future.
  • Focusing on what has been and what is, and not understanding the need to keep ahead of the competition.
  • Failing to embrace new technology.

Although all of these are important challenges to overcome, in my experience, the most critical one is simply not embracing a beginner’s mind. Because most franchise companies are founded by entrepreneurs, their tendency is to be independent and to figure things out on their own and on the fly. There is usually a sense of pride in this self-determination which has many positives, but also many negatives. When franchisors take the position that they know it all or can figure it out all on their own, they stop learning. When this happens growth stalls, whether you are a start-up, a junior, or a mature franchisor.