6 Common Challenges of First-Time Franchisers


At first glance, owning a franchise may seem like an easy way to launch your own business. However, business – of any kind – is rarely simple, and franchises are no exception. Knowing about these six challenges will help you avoid the pitfalls that many first-time franchise owners find themselves struggling with.

1. Misunderstanding the Disclosure Document

Disclosure documents are long – around 80 pages, according to Inc, – and as a result, franchisees tend to skip over important information. However, each and every item needs to be read and understood. If any items are unclear, take notes and ask the franchisor or your attorney to explain it in more detail.

2. Misunderstanding the Franchise Agreement

Just like with the disclosure document, it’s important that you thoroughly understand the franchise agreement. Review the agreement, along with other legal documents, with your attorney. If you need any areas clarified, have the franchisor provide clarification in writing.

3. Thinking You Have a New, Fresh Idea

The whole purpose of a franchise is counting on a tried-and-true business model. While your franchise may be new to the market in your specific area, it’s by no means a brand new idea – it’s not even your idea! Furthermore, Forbes suggests never getting in at the beginning of a new franchise, especially if it’s founded on a totally new idea. You should only purchase a franchise that has a great track record. If you were going to take a risk, you might as well open your own business instead of a franchise.

4. Assuming You’ll Be In Control

While you may be the owner of the franchise, the business model is owned by higher ups. The perks of a franchise are uniformity and conformity – freedom isn’t something you should be expecting. Franchise owners don’t really have a lot of control, even though you’ll be the boss at your specific place of business. Be prepared to follow orders and to work for a mission that’s already decided for you.

5. Believing That the Franchise Will Never Fail

Just like any business, franchises are prone to failure. Interestingly, franchises tend to go out of business at the same rate as regular, non-franchised businesses. The franchise you opt for may make a difference, though, so choose wisely.

6. Not Hiring an Attorney

You need an attorney on your side while you go through the process of purchasing a franchise. Make sure that your attorney is well-versed in franchises – a business attorney may not knows the specifics of purchasing a franchise. Far too many franchise buyers don’t have an attorney who they can consult when they need certain things explained.

No matter what type of franchise you’re planning to open, it’s important to know the realities of owning a business.