Franchise owner learning about the challenges of business ownership
Client Success,  Franchise Exploration,  General Business

Franchising 101: 5 Challenges of Owning a Franchise

Franchising is a business agreement in which one entity licenses another to use its trademark or individual business systems and processes. This enables the party to manufacture and sell a product or service that meets specific criteria. The franchisor is the person who grants these rights, while the franchisee is the person who buys them. However, you must consider the challenges of owning a franchise.

Deciding to purchase a franchise is an exciting step in making your career goals a reality. If you’ve never owned a business or worked with a franchisor, it can also be an intimidating step. Below we’ll look at some of the challenges you’ll face as a new franchisee, so you can prepare for and overcome them.



1. Capital Deficit

Starting a business is an expensive endeavor, even if it’s a franchise. After all, you have to spend money to make money. This is without a doubt one of the top challenges of owning a franchise. The best way to overcome this hurdle is to start with your chosen industry. The cost of the franchise you choose varies based on location, size, and inventory requirements. With some franchises, you can run them from your home. Others will require that you obtain a retail space. You may need to hire a staff and purchase inventory to start.

Other things to consider are marketing consultants, lawyers, and other professionals that provide necessary services to help you succeed. If you don’t properly budget for these expenses, your new franchise won’t be the success you’ve been dreaming of. Make sure you set aside plenty of money, secure a loan, and set a reasonable target for recouping the initial costs.


2. Working with a Franchisor

As you start your franchise, you’ll be working closely with the franchisor to ensure the brand image is maintained and the company guidelines are put in place. Your franchisor wants you to be as successful as you do. If all goes well, they will be transparent with you about business decisions and updates. Of course, there is a chance that you end up with a franchisor who is difficult to work with. Be prepared for this possibility. As with any business, you’ll have to be well-versed in handling conflict and building successful business relationships. In this case, with your franchisor.


3. Hiring Exceptional Employees

Long term success of your business requires a trustworthy team of individuals to support you. If you’re opening a large franchise, you won’t be able to manage everything at once. You have to put a lot of faith in your employees to do their job and make decisions you would approve of. It is among the many challenges of owning a franchise. To ensure your success, be discerning in the interview process. You’ll want to make sure your new employees fit the company culture and are committed to hard work.


4. Introducing New Ideas

Even though you’ve purchased this franchise, you still have to follow the guidelines set forth by the franchisor. There will be an operating manual that explains everything that is approved in terms of location, branding, management, and procedures.

Naturally, you might have your own ideas about running the business. Many entrepreneurs are creative and forward-thinking. Be mindful about if and how you incorporate your ideas. You’ll need to work closely with your franchisor to ensure everything is approved and doesn’t breach your agreement. This is where having a good relationship with your franchisor comes in handy!


5. Non-Compliance Consequences

Ideally, there won’t be any issues between you and your franchisor during the length of your agreement. However, one of the challenges of owning a franchise is that with the number of rules and guidelines you’re required to execute, there is a chance that you may encounter a few.

If that happens, the franchisor can issue a breach notice which gives you a period of time to rectify the issue. If the problem isn’t fixed, the franchisor has the right to terminate. Of course, you can avoid that altogether by following your agreement to a T.



Hundred Acre Consulting

There are challenges with any new business endeavor and with a franchise that includes dealing with a franchisor and maintaining the required regulations. I hope that my list sheds some light on the challenges of owning a franchise and how to overcome them.

Hundred Acre Consulting is here to help guide you through the process and keep those challenges to a minimum. We’ll help you choose the right franchise for you and lead you through the process of becoming a franchise owner.

Ready to work with a franchise consultant? Contact me today, and let’s get started!