Dealing with a failure in a franchise UK business is not easy! When your franchise fails, you lose much more than your initial investment capital. Franchise is one of the safest business options; unfortunately, some businesses fail for various reasons. In this post, we will give you an insight into the reasons that leads to a franchise failure and how you can avoid these mistakes and protect your franchise from a disaster.
Avoid Investing in the “Hot New Franchise”
One of the main reasons new franchises UK could end up as a bad investment decision is when you pick a brand new franchise that has not been tried and tested before. Always choose a franchise that’s established, conduct a feasibility study to know if your investment in a particularly new franchise will be successful or not. Market research will prevent you from making an uninformed decision about your investment in a new franchise business. Try to be a part of a franchise that has a considerable market value and a strong franchise marketing presence.
Monitor your Bottom line Performance
As a franchisee, whether you have full time or part time franchises its essential to monitor the bottom line of the franchise. You have to keep a close eye on the bottom line to determine whether you have sufficient cash flows coming in to sustain your business. Cash flow influx needs regular monitoring to avoid heavy losses. For home based franchises, consider looking at your fixed costs. One of the reasons that such franchises fail is the lack of expense monitoring system. Have a system in place that allows you to manage the cash flows to keep everything in the right order, franchise rarely fail and when they do, it’s the lack of monitoring.
Hire a Franchisee Attorney
Most low cost franchises fail because the investors lack the services of a reliable franchisee attorney. A franchise attorney will help you in your paper work when you enter into an agreement with a franchisor. The terms and conditions should protect your interests. Franchise agreement contains several complicated clauses that could leave you confused. An attorney who has been in the business for over 10 or more years will help you understand all the clauses of the agreement and help you understand the document and your liabilities. Even if you plan to invest in van based franchises you should consider hiring an attorney.
Failing to Conform to the Standards
When a franchisee is unable to meet the required quality standards assigned by the franchisor, the franchise will eventually fail due to non-conformance with the standard operating guidelines. This is particularly true for food franchises UK. Food franchises including coffee franchises need to follow strict quality control protocols assigned by the franchisor.
Seek training and assistance from the franchisor to conform to their quality standards without any problems. Failing to train your workforce to comply with the operational guidelines will lead to a major failure of your franchise unit.
Franchise is a successful business idea and a safer investment option, but there are some restrictions that the franchisee is subjected too. One of them is conformance to the guides and principles of the franchisee.
Find the work-life balance you always wanted. Get in touch with Quality Franchise Association for more information on how to become a franchisee.