Despite our lackluster economic situation, we should never blame the recession for our franchise failure.

In franchising, we have witnessed some established franchises made it, while some others don’t – both franchisees and franchisors share their own mistakes; in franchising, “it takes two to tango” couldn’t be more relevant.

Here are some reasons why established franchises fail, looking from both sides – franchisors and franchisees:

1. Franchisors compromise too much, franchisees demand too much

In order to win franchisees’ business, some franchisors are compromising on what’s important, such as product sourcing, pricing policies, staffing policies, etc. Franchisors must not compromise on such important things!

In the other hand, franchisees demand things, often ridiculous ones, to franchisors – if your store’s window is broken, should you call the Support Team? Most likely, what you’ve asked for is silly.

2. Franchisors don’t listen to their franchisees, and vice versa

Listening skills is important in any aspect of our life, including in franchising. Franchisors who don’t listen to their franchisees miss huge opportunities to gain insights from smart business people – they are smart enough to buy a franchise from you, right? Why can’t you trust them?

As of the franchisees – you need to listen to your franchisors – no matter whether you agree with them or not; your franchisor is more experienced than you (therefore you buy the franchise!) – why can’t you trust your franchisor?

3. Franchisors are busy taking care of bad franchisees, bad performing franchisees are becoming “traitors”

Franchisors who are too busy taking care of “bad” franchisees (those that don’t follow rules, those that complaint a lot, etc.) are lacking of resources to manage the cooperative franchisees – those who deserve more attention from you.

In the other hand, franchisees who perform badly are “tempted” to become “traitors” – those that oppose the franchisors, complaints a lot and spread negative word of mouth to others (and seem don’t care if doing so can damage their own franchise units.)

4. Franchisors don’t have strong Management Team, franchisees ask the franchise support team too much

Franchisors cut costs – every business people should cut costs; but cutting cost by hiring so-so staffs can have disastrous effects.

Franchisees share their own mistakes – receiving top notch support won’t satisfy some franchisees; they ask more and more from the franchise support team. Again, asking the support team to fix your broken window is too much.

5. Franchisors make things too complicated, franchisee can’t seem to be able to follow simple rules

Franchises should streamline the franchise operations. Too complicated procedures are turn-offs.

In the other hand, some franchisees are simply lack of intangibility – they can’t simply be guided to follow even simple rules.

I hope those help you to identify what’s important in maintaining the survivability of your franchise.

Ivan Widjaya
On failing franchises
Image by StillSearc

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