Which factors most determine success or failure in the franchise industry?
Well, let’s look at both sides of the equation, meaning the franchisor and the franchisee.
First, the franchisor, as mentioned elsewhere, must have a solid, proven operating system, one that is free of major holes. When franchise companies fail, it is generally due to a system that cannot be sustained under a variety of owners/managers and in a variety of locations. In other words, there is a “hole” in the system. For example, let’s assume that the founder of a bookkeeping firm is both technically savvy about the business and also a great salesman. And, further assume that after much success the founder decides to franchise his concept. Bookkeepers are generally not known for their great sales abilities, so unless the founder, and now franchisor, helps his franchisees with the marketing effort, many will fail because they lack the founder’s selling skills. Merely telling the franchisee that they “should be selling” their services is not enough. That is a gapping hole in the system.
Second, the franchisee must obviously have the ability (and willingness) to follow the system. If one is a natural tinker, then dissatisfaction will likely set in and the experience will be negative. Unfortunately, the franchisee is at a disadvantage, at least initially, because they are just coming into the system and have yet to find the real truth behind the scenes. Often times a franchisor is just too willing to make a sale, even if the person may not be a good candidate for joining the family.