Why Franchises Fail

According to the U.S. Department of Consumer Affairs, about five per cent of affiliates fail. Any number of factors could be responsible for this failure, however, such failure can almost always be prevented by doing your due diligence at the outset. Such factors that could contribute to the failure are:

1) Poor Location: Seasoned Franchisee will tell you that one of the most important keys to a successful franchise is the location. Regardless of how well is your brand name, if you are uncomfortable located in an isolated area or otherwise off the beaten track, your chances decrease a lucrative business of sports.

2) Poor reception of your idea: receiving a community of the concept behind the franchise could make or break your success. For example, when it comes to fast food, hamburgers seem to have more or less universal appeal, while some ethnic foods can not. Keep in mind that if your business model is complicated, it is more likely in for difficult times - your goal should be to create an operating standard that can be easily replicated.

3) Nasty Competition: The fact that there are currently more than 160,000 franchises in the U.S. means that there is a lot of competition for prospective franchisees. Take a look at your market is already saturated with the concept that interests you? If so, you might consider something that is popular, but not yet tapped out. For example: "healthy" franchises are becoming increasingly popular and offer a good opportunity for those who want to get involved in franchising.

4) weak marketing / advertising: It 'a good idea to join a franchise network where the franchisor has an advertising / marketing fund to which all members contribute monetarily. Some of the larger chains have the most successful national advertising campaigns, while children tend to advertise locally. Depending on the type / size of business you choose, you may have to do most of the legwork - namely, to solicit their customers. If the concept requires sales skills who have not, reconsider the choice of that concept - can not be right for you!

5) Unrealistic expectations: it is not unusual for a new affiliate to have high expectations for his business. Remember: It may take up to three years before seeing any profit - if you plan to make a profit first, it may well be sorely disappointed.

6) You're not a people person: In order to make a franchise, you have to put in long hours on a variety of characters. True, some people are harder to interact with others - but, as a business, you must be able to interact well with all different types of people. Remember that the ability to manage employees is essential to the success of your business .......