FranCoach Blog

5 Reasons a Franchise Owner Fails

Written by Tim Parmeter | March 15, 2019
Starting a franchise can be scary. It is absolutely not for everyone. The reality, however, is that franchise ownership is not nearly as risky as many people may think. Despite the overwhelmingly high success rate of franchises relative to start-ups or the control one has over their career as a franchise owner rather than working for the man, fear is still the main thing that keeps people from even taking the first step to explore this option.
But just how realistic is that fear? Today, we examine the 5 main reasons a franchise owner could fail.

1. Laziness

It is not the job of the franchisor to drive every customer to your business while you kick your feet up on the desk and bathe in $100 bills. As crazy that that sounds, occasionally owners really open their franchise and expect it to just start raining money without doing anything. As an owner, even a semi-absentee owner, you have to work. You don’t have to work insane hours, you simply must do your job as defined by the franchisor. If you are not willing to work at all, if you are not willing to do what is required from an owner, then please don’t start a franchise. The corporate world is a much better fit.


2. Not Following the Plan

This might actually be more insane than being lazy. In this case, the owner is putting forth effort, however they are purposefully not doing what the franchise business plan explains they should be doing.

Imagine cooking your favorite dinner. The recipe calls for a pinch of salt but instead you use a cup of salt. How do you think it is going to turn out? So then, why would you invest in a franchise and then ignore a proven plan; one you have vetted out, seen successfully used, and been trained on? Yeah, we don’t know either, but it happens.


3. Divorce/Separation

After five years in business, over 90% of franchises are still open. After five years of marriage, roughly 80% of couples are still married. Life happens. Could the separation be the result of the business? Sure, it could. But regardless of the cause, the end of a personal relationship can have a negative impact on the franchise. In some cases, it can cause the business to be sold sooner than originally planned.


4. Health Issues

Whether it is the franchise owner or a close member of their family, there are times when a serious health issue (or death) can result in a franchise owner not being as successful as they originally planned, or not being able to maintain their success. Unfortunately, acts of God happen whether one works in the corporate world or as an entrepreneur. There is nothing we can do about it. The benefit of being a business owner in this unfortunate time is that there is a tangible asset that can be sold – or passed on to a family member – if times get really tough.

It is important to note that in the last two examples, selling a business should not always be considered a failure. For most, selling their franchise is the ultimate exit strategy. These two reasons simply expedite that eventuality.


5. Wrong Fit

This fear is our main focus working with clients. A trained professional franchise consultant can eliminate these mistakes but only through an open and honest process.

The wrong fit isn’t an act of God like reason number four, or an unfortunate situation like reason three. It is also not laziness or incompetence like reasons one or two. This is a genuine, honest mistake made by both the owner and the franchisor. This is also where the legitimate concerns over the risk factor come into play. So how can the risk of choosing the wrong franchise be mitigated?

First, understand the search to find the best franchise to own is not at all like how one finds the next corporate job. We don’t hunt and search blindly. We do not answer questions during the franchisor vetting process like it is a corporate interview. The goal is not to guess what answer they want to hear so they will hire us.

The goal is to determine what the best franchise is to own. To achieve that goal we must, absolutely must, be honest. This honesty must be with oneself on what you are willing and able to do as an owner. You must be honest with the franchisor on what you want as your owner role as well as what you want and need from a franchisor.

Second, we must understand the focus of the Discovery Process. A great deal of the Discovery Process is based on the positives of the franchisor and the potential owner. As it should be.

The franchisors talk about what makes an owner successful in their system, what success can look like, their detailed business model, the support provided in marketing, personnel, training, back-office, or any number of other great ways franchisors can assist their owners.

The potential owner talks about their past successes, the drive behind wanting to be an owner, their core values, and any other items of importance to them.

Both franchisor and potential owner are spot on for discussing these items as they are crucial in determining the best franchise match.

However, this approach does not always diminish the fear of failure many potential owners have as they vet franchises. In lieu of asking the REALLY important question, this fear can then attach it to pretty much anything that can scare someone off from what could be a fantastic opportunity.

What is the REALLY important question? FranCoach recommends all our clients ask the franchisor “why would one of your owners struggle or even fail?”

This is a simple but powerful question. Once asked, kick back and listen, really listen to what the franchisor says next. If they talk about skill sets, behaviors, goals or personality traits that describe you then just hang up the phone. OK don’t literally hang up the phone as that would be rude but understand that this answer tells us that particular franchise is the wrong fit. This fact does not mean they are a bad franchise or that you should not be a franchise owner, it means THAT franchise is not the right fit for you.

However, if the franchisor is explaining why one might fail and you are thinking “DUH” of course that type of person would fail in their franchise then we are absolutely on the right track. We have just learned that you don’t fall into their high-risk profile of an owner. When we combine this info with the confidence you have that you are not going to be lazy (Reason #1) and you will follow the plan (Reason #2), the potential of failure has all but been eliminated.

FranCoach clients are also coached to ask one follow-up question. “As a new owner, If I do struggle, what is the franchise going to do to help me?” This answer is likely to be a long one.

If you hear the franchisor’s answer and think that is exactly what you would do if you were the franchisor then we are in business – almost literally. We now know, in addition to all the other positives, your core values are in alignment with the franchisors’. This connection even further reduces the potential of prolonged struggles, much less failure, you could encounter as a franchise owner.

Unfortunately, FranCoach cannot help with the first four potential reasons one could fail as a franchise owner. However, we are 100% in the business of eliminating any failure from the franchise being the wrong fit. When the risk factors are reduced through the proper approach and mindset, it is easy to see why the success rate is so high for franchise ownership in general. It is also easy to see why more and more people are choosing to take control over their personal and professional life by leaving the corporate world and becoming a franchise owner.

If now is the time to face your fear and take control of your life, then let’s talk. There is never a fee for our service, and we don’t bite…so what are you waiting for?

So, what are you waiting for? The time to take control of your personal and professional life is now, and we’re here to help you with your franchising needs, questions, and concerns. Contact us today for a consultation. There’s never a fee for our services.