Franchising is a marketing concept that allows entrepreneurs to adopt an established business as a strategy for growth and expansion. The franchisor creates a business model and system for franchisees to follow. The system involves the franchisee’s access to business procedure, intellectual property, branding, and the right to sell the products or services. The franchisee pays a certain fee and complies with the franchisor’s policies and procedures in return.  

There are several franchising brands that were proven effective; hence, more and more entrepreneurs are considering the franchise industry. Buying a franchise can either result in great success or extreme downfall. But it depends on the franchisees’ approach to the process and how they make a decision. So here are the most common mistakes you have to avoid when starting a franchise.


Failure to Explore Your Options

The franchise industry is much more than just restaurants and retailers. Yet, most franchisees are usually drawn to large and well-known retailers that they miss other smaller options. Considering small business opportunities are less expensive but they can have a strong financial performance to meet your business goals. Some examples are water refilling station, salon & spa, vending machines, personal services, or pharmacy.          

Failure to Get the Right Financing

Opening a franchise and getting it funded is the most complicated part. One of the most common strategies I heard from entrepreneurs is to consider bank loans when starting up. However, most banks will require at least 30% downpayment which often hurts more than it helps.


As a great alternative, some companies are offering combined Small Business Administration (SBA) loans, unsecured business loans, and Rollover for Business Startups (ROBS)  where franchisees can invest their 401(K) without having to pay for taxes, distributions, and penalties. You just have to familiarize yourself with how these financings work so you won’t get undercapitalized in the long run.    

Lacking Market Research

Doing market research is one of the most important business strategies that you have to accomplish before purchasing a franchise. And trying to skip this method could be your ultimate mistake. Once you’ve found the right franchise for you, start conducting market research by investigating at least 10 franchisees involving top, average, and lower performers. These existing franchisees will provide you knowledge about running a franchise, execution of daily tasks and employment training, realistic views on profits and effectiveness, and the common problems to encounter.  

Underestimating Profit

Another big mistake occurs when franchisees expect to generate profits immediately. And when they notice that it does not profit the way they expected, they quit the business right away. But franchisees should understand that when it comes to business and franchising, no profits are generated in the first 18 months of operation. Plus, reaching the break-even point at different time periods is normal. You just have to wait patiently and see what happens next.   

Not Considering a Marketing Plan

Setting your marketing strategies is like setting a game plan to win. Believing that marketing is no longer part of their job, franchisees expect too much support from the franchisor. Remember that you can do something to get a line of customers in your own ways. Besides, a marketing plan is something that all entrepreneurs should have.


Getting involved with the community is the best way to market your business. You can also look for fundraising events to get involved in, you know the rule: building “CONNECTIONS”. Just think of effective strategies that will help you reach people and turn them into regular customers.   


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