Eager to escape the corporate grind and be your own boss? For many, buying a franchise seems the foolproof path to small business ownership. Simply replicate an existing successful brand in your local market, and profits will flow automatically. Not so fast. Numerous hidden pitfalls trip up rookie franchisees attempting to go it alone. However, engaging a seasoned franchise consultant early when exploring opportunities helps novice buyers sidestep expensive blunders.
In over 20 years of guiding franchisees, the experts at Upside Group Franchise Consulting have uncovered the five most common mistakes first-timers make. Getting wise counsel who has been there before helps newbies avoid the following errors from the get-go:
Rushing Into the Wrong Brand
Euphoria from the prospect of freedom propels many new franchisees to jump on the first marginally promising brand they come across that fits their budget. Moving too fast without thoroughly vetting the concept, leadership, support structure, proven business model, and true earnings potential is a recipe for disappointment and failure. An advisor plays matchmaker, considering your skills, passions, and goals to pair you with brands that have your back and are primed for success.
Signing Unfavorable Contract Terms
In the excitement of the sale, novice franchisees often gloss over legal clauses in the FDD and franchise agreement, potentially allowing the franchisor to make unilateral changes or impose unreasonable demands down the road. A consultant serves as your bargaining advocate, negotiating more favorable terms related to royalty fees, marketing contributions, renewal options, transferability, territory encroachment, owner exit strategy, and working to remove ambiguous language, leaving you vulnerable later.
Picking the Wrong Location
Many franchisors promise to help you select an ideal territory with their insider experience. Yet rookies often end up in suboptimal locations lacking the customer demographics, traffic patterns, visibility, parking, signage opportunities, or accessibility to supply chain routes required to thrive. An advisor independently vets each site using geospatial analytics mapping target customer density, psychographic lifestyle data, competitive forces, and commercial growth projections to endorse or veto potential areas.
Minimal Due Diligence
Beyond a franchise brand’s glossy brochures, newbies rarely peek behind the curtain to corroborate earnings claims or research the support office’s stability. With convincing promises and swift-talk salesmanship, many unsuspecting folks pour their hard-earned cash into dodgy ventures. A consultant directs your due diligence by supplying probing questions to ask existing franchisees, reviewing public financial filings, confirming registered trademarks, and assessing executive experience to expose any red flags.
DIY Opening Attempts
Some franchisors promise turnkey solutions while leaving much of the heavy lifting of securing financing, permits, inventory, equipment, staffing, and pre-launch marketing to franchisees. Rookies without hospitality experience often underestimate the demands of opening a restaurant or retail location. Lean on an advisor to project manage the entire setup process, which includes building tenant improvements, making vendor introductions, negotiating terms, and directing your launch sequence to hit the ground running.
While no business endeavor comes without risks and learning curves, enlisting an experienced franchise consultant when entering franchising significantly slants the odds for first-time buyers towards rewarding independence rather than regret. Contrary to assumptions, you don’t have to figure everything out alone through painful trial and error. Partners like Upside equip new franchisees to sidestep common amateur mistakes by taking advantage of two decades’ worth of industry insights to inform every major decision, negotiation, and milestone during your transition to ownership. Contact Upside Group today to secure your franchise future.
