Operating a Successful Franchise: Not as Easy as it May Seem
by Ed Teixeira
New franchisees should recognize that operating a successful and
profitable franchise is never quite as easy as it may appear. Despite the
numerous anecdotes about successful franchisees, success often requires hard
work and recognition of your limitations.
Iíve seen my share of franchisee failures over the course of thirty plus years
in the franchise industry. Some of these were attributable to flawed franchise
programs, however, some were the result of franchisees not recognizing just how
difficult it can be to launch and operate a new business whether itís a
franchise or independent operation. The responsibility for this situation can be
shared by franchisors that overly hype their franchise opportunity and
franchisees who fail to perform adequate due diligence and critical self
Before presenting my comments letís assume that the franchise has a
successful track record and is not a start-up. (If
youíre dealing with a start-up see my previous article on evaluating start-up
Secondly, weíll assume that the franchise candidate meets the financial
profile and investment requirements for the specific franchise.
Although a franchise is based upon a successful business model and existing
brand recognition, there are certain franchises that I would call a true winner.
In this category, are the franchise concepts that have a highly successful track
record like McDonalds, KFCís, Subway, 7-11 and Panera Bread to name a few.
In many cases the lower the franchisee investment the more success will directly
depend upon the hard work, efforts and ability of the franchisee. For
example, consider franchises that require an investment below 100K. In the
majority of these cases the franchisee will be expected, to generate sales and
new customer accounts. This requires particular selling skills and a good deal
of effort. It means that a franchisee may need to work more hours than they
expected if they are to be successful. However, this challenge is not exclusive
to low investment franchises. If a franchisee doesnít have the skills that match
the operational requirements of the franchise it could require long days and
hours to be successful. Yet even with the proper skills a franchisee may need to
work long hours.
Individuals that are considering the purchase of a franchise need to fully
understand what it will take to be successful. Here are some ways to make that
- Unless your franchise is a ďWinningĒ franchises be sure your
skills match the requirements needed to successfully operate the
franchise. There are lots of successful franchise programs but
you need to exercise proper due diligence to identify the right
ones. Donít be over confident but rather take a critical look at
what operating the franchise requires.
- Know what business skills are required to operate the
franchise, be sure you have these skills.
- Confirm what it takes to be successful by asking existing
franchisees. Donít forget to contact some franchisees that have
terminated their franchise. You may learn a lot more than you
think. Most importantly inquire about how long and what it took
before the franchisees reached break-even.
- Have the resources to hire adequate staff. A new franchisee
that is operating with limited working capital may not be able
to afford hiring the right amount of staff. This can mean long
hours and ultimately frustration.
People looking to purchase a franchise can get caught up in the hype of
owning and operating their own business. However, without the proper knowledge,
skills and resources the result could be long days with limited success. Above
all, avoid buying a franchise that will become just another job.
© 2011 FranchiseKnowHow, LLC
Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at