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Top 5 Challenges of Running a Franchise Business

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There are more than 100 industries that present opportunities for franchises. What’s more, the franchise sector has shown incredible resilience despite increasing economic restraints in a competitive environment.

Whether you’re an entrepreneur contemplating the possibility of opening your brand up to a franchise, or a business owner with an opportunity to join a franchise, there are critical challenges you should be aware of.

As with any business venture, franchises present risks regardless of how successful an existing business model is. Having crucial insights beforehand enables you to drill down a strategical plan.

Franchise Laws and Regulations

In the late 20th Century, franchises were much easier to execute. In recent years, laws and regulations have made it far more difficult for business owners to expand through a franchise model.

Today’s franchise sector is particularly litigious. Franchisors and franchisees that are not aware of the legal pitfalls and best practices risk jeopardising the future of your business operations.

Before venturing into a franchise, you should seek the counsel of legal advisors that have experience in franchise law and regulations.

Finding the Right Partners

A franchise “family” requires two forces to pull in the same direction. Even though a franchisor may have a successful business model, it can often be the case that the experience and information a franchisee can offer is equally or more valuable than the franchise itself.

If either party is too rigid in their approach, franchise partnerships can turn sour very quickly. From a franchisor perspective, the right partner must align with your brand, company culture, and have relevant resources in place. Franchisees have to be prepared to ring the changes.

Managing Expectations and Fears

The knock-on effect of franchises filters down into the workforce – which can be bad for staff morale. It is often the case that job security issues arise whereby motivation and performance levels drop quickly.

Some of the common reasons why franchises fail are because fears and expectations are not managed and performance standards of the business drop because employees are demotivated.

Companies also risk losing top talent unless the expectations and fears are managed properly. When business conditions change, the in-house atmosphere can change as well so it’s important to ensure communication is frequent, engaging, and transparent.

Adapt to Consumer Needs

The world is evolving at a rapid pace right now. Socio-political, economic, and environmental changes are driving customer needs and consumer behaviors. Digital technologies have forced established enterprises to modernize their business model.

Tried and tested business models are no longer guaranteed to succeed. This is especially the case in the franchise sector. Customers are increasingly wanting to see innovations that resolve their pain points and they want immediate resolutions.

Moreover, there is a rising consumer focus on corporate responsibility, a lack of trust in advertising and a microscope on ethical and sustainable business practices. In a franchise, it can be difficult for brands to appease consumers that are averse to the “evils” of capitalism.

As markets continue to evolve, entrepreneurs will consistently be presented with new challenges that interrupt the forward progression of a franchise. Staying ahead of industry developments and planning solutions to overcome the hurdles ahead well in advance will enable you to remain competitive and grow at a faster pace.