The 5 Most Common Franchise Startup Mistakes (and How to Avoid Them)
Many eager entrepreneurs go in thinking that they’ll achieve guaranteed success because all they have to do is purchase the name and idea of an existing brand. One way to get a sense of how the process actually works is to identify the most common mistakes new and aspiring Franchise Owners make. Here, we’ll discuss what those mistakes are and how to avoid them.
Not Conducting Market Research
Arguably the most common–and costly–mistake aspiring Franchise Owners make is not understanding their market or doing proper research. It’s important to think about the market of your chosen franchise and whether you’re going to have a customer base.
Even successful organizations can’t guarantee money-making capacity and long-term success. So if you’re going into the franchise business thinking you don’t have to conduct market research, you could end up facing costly consequences.
When conducting market research, be sure to consider the following factors:
Your local market: Every franchise is different when it comes to location. So, it’s important to get familiar with your local market. For example, this might include researching your competitors. Knowing your competitors and how successful they are at getting customers will help inform your marketing and sales strategy.
Franchisor reputation: Before buying a franchise, it’s crucial to know how well one is performing. You can gather this information by finding out how long a franchise has been in business, looking at reviews, looking for any past lawsuits they may have had, and gauging their financial performance.
Start-up costs: Not taking startup costs into account before purchasing a franchise is a common mistake. For some franchises, costs remain relatively the same. But for others, startup costs can vary. Either way, you should consider certain start-up costs, such as franchise fees, office supplies, sales and marketing, and operations costs.
Not Understanding Lease Terms
If you’re passionate and excited about becoming a Franchise Owner, it’s natural to lose sight of the legal side of owning a business. That includes failing to understand lease terms, which can be a costly mistake. If you’re like most Franchise Owners, then you’ll typically have to lease space to run your business in a retail environment. Unfortunately, this is one of the most common start-up costs when it comes to purchasing a franchise.
You’ll often come across a number of economic factors to negotiate a commercial lease. For example, it’s important to look out for any escalation clauses for the base rent in future years. You might also want to consider cost assumptions, common area maintenance (CAM) fees, and tax charges. Knowing what to look for and understanding the terms of your lease will prevent surprises in the long run.
Buying a Franchise that Doesn’t Properly Screen Candidates
Another mistake aspiring Franchise Owners commit is buying a franchise that only requires them to fill out and sign legal and business forms. This could end badly because it may indicate that a franchise doesn’t have the best reputation and is only out to make a sale.
Purchasing a franchise is a large investment. This means that you have a vested interest in the success and longevity of the franchise you’re buying into. When a franchise conducts screening for an aspiring Franchise Owner, it shows that the franchise cares about its brand and is serious about making sure candidates meet the brand’s core values.
Working with a franchise that thoroughly screens candidates can make you feel more confident that you’re joining a business culture that genuinely cares about its reputation. Doing so will also ensure a strong match between you and the franchise’s objectives, capabilities, and backgrounds.
Not Preparing for Supply Chain Issues
Many new Franchise Owners fail to investigate the organization’s supply chain management. You need reliable supply chain systems to keep supply costs competitive and predictable. Supply chain due diligence will help your future promotions run more efficiently and ensure brand and product consistency.
This all hinges on your ability to create and maintain positive relationships with your suppliers. Plus, knowing the wants and needs of your local customers will help you find similar, acceptable substitutes in the event of a supply chain shortage. And if you’re in a service-based industry, it’s also essential to ensure the availability of some special B2B products.
Thinking You’ll Be Independent
Many aspiring Franchise Owners go into their business ventures thinking that they’ll be their own boss. Many think that they’re going to follow their own system and have their own independent brand. Not so with a franchise. The truth is, successful franchises don’t get where they are without a proven system. So, even though you’re an entrepreneur, you’ll still have to tame your independent streak and trust the franchise.
After all, they know the system better than you do. Franchises pride themselves on maintaining brand consistency across the board, which is key in building customer relationships. Owning a franchise can be a rewarding experience. But without the proper knowledge and tools, it’ll be difficult to run a successful franchise. At NEXTAFF, our aim is to help aspiring business owners get the resources they need to avoid common mistakes.
For more information about franchising development and management, download our detailed franchise report today. You can also visit our FAQ page for any questions you may have.
How to hire for the future
In the commercial shipping industry, staffing shortages have been on the rise for years – and the concern is only going to grow. This situation arose partly from an organic shift in the marketplace towards purchases online, accelerated tenfold by the Covid-19 pandemic.
Gaps in the labor market have arisen for more factors than just one, however. Data from the US Bureau of Labor Statistics show that more than 4.3 million people “voluntarily quit,” jobs in December 2021, just missing the record high from the previous month.
On top of the consumer market, Millenials and Gen Z have previously been reluctant to join the warehouse workforce. Although in contrast to their slightly elder generation, the latter has shown more readiness to pick up warehouse work.
Statistics tell that Gen Z is upwards of 10% more likely to seek out transport work than their former. That being said, the market is also expecting a further decline in the workforce in the coming years. As of April 2022, transportation, warehousing, and utilities have seen the largest increases in job openings.
With so many moving parts, how can businesses stay on top of hiring in the current market? The aid of a liaison that can provide easy access to an available workforce becomes necessary.
Benefits of Working Alongside Franchise Agencies
In the summer of 2022, many industries, in general, are struggling to find the workers necessary to keep up with demand. Employment rates are still lower than they were pre-pandemic.
“As the U.S. economy continues adding back jobs after the pandemic recession, the staffing industry is playing a key role in getting people back to work,” said Richard Wahlquist, the president and CEO of ASA.
The global staffing industry revenue is $445bn, and in the US alone it amounts to over $130bn. There are a lot of reasons why staffing is one of the fastest-growing industries in B2B services. Candidates hired out of staffing agencies are typically more skilled, and ready to fill in for positions requiring years of experience.
When corporations and businesses face a prominent staffing gap, a common gut reaction can be cross-training existing employees to take on work for the missing labor. This is usually a costly mistake, however, leading to problems down the line – sometimes even resulting in more employees quitting!
The logical approach, when faced with seasonal staffing shortages, isn’t to stretch what you’re already working with, but to breathe new life into your workforce. This process is made immensely easier when partnering alongside a trusted and highly useful staffing agency.
Consider the Temporary and Contracted Workforce
When dealing with summer staffing shortages, it’s key to look for candidates with more flexibility in their schedules. Having the right intention and motivation when hiring during these times will truly help in the long run.
Staffing agencies can help businesses connect with workers who are:
Recently graduated students beginning or working on their career paths
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- New graduates are always on the lookout for part-time work, and while they may move on to different work opportunities in the future, they make excellent employees due to a readiness to learn and improve.
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Parents and caregivers seeking part-time work
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- During the pandemic, many parents found themselves opting for working from home to help their children with remote schooling. However, now more parents and caregivers are opting for new temp jobs to better align with changing family schedules.
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Recently graduated students beginning or working on their career paths
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- Skilled individuals swapping careers paths needing work in-between
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Employees brought on during such turbulent times can sometimes even outperform their colleagues. The desire to do one's best seems to shine during the temporary employment period, which in some cases leads to permanent and much-needed hires.
NEXTAFF Can Help Manage Your Needs in the Changing Climate
In the summer of 2022, many industries, in general, are struggling to find the workers necessary to keep up with demand. Employment rates are still lower than they were pre-pandemic.
“As the U.S. economy continues adding back jobs after the pandemic recession, the staffing industry is playing a key role in getting people back to work,” said Richard Wahlquist, the president and CEO of ASA.
The global staffing industry revenue is $445bn, and in the US alone it amounts to over $130bn. There are a lot of reasons why staffing is one of the fastest-growing industries in B2B services. Candidates hired out of staffing agencies are typically more skilled, and ready to fill in for positions requiring years of experience.
When corporations and businesses face a prominent staffing gap, a common gut reaction can be cross-training existing employees to take on work for the missing labor. This is usually a costly mistake, however, leading to problems down the line – sometimes even resulting in more employees quitting!
The logical approach, when faced with seasonal staffing shortages, isn’t to stretch what you’re already working with, but to breathe new life into your workforce. This process is made immensely easier when partnering alongside a trusted and highly useful staffing agency.
Your path to a secure future.
Take the first step. Find out more about one of the fastest growing companies in the $160 billion staffing industry. Our detailed Franchise Information Report teaches about our business model, financials, and more.
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