Why Franchises Fail & What to Do About It Part 1
It raises an interesting question that is often debated here: who’s to blame for franchise failures?
Franchisees?
Franchisors?
Sometimes both?
Always both?
The FranBest post gives the example of an actual printing franchise owner named Jenny.
Jenny’s Twitter page entries indicate that her approach to building her printing business involves following celebrities online, gazing out the window and “watching the world go by.”
Here are her actual Twitter page entries:
12:59 PM Mar 10th Sitting in my print shop waiting for a sudden onslaught of customers
12:13 PM Mar 18th looking out of the window watching the world go by
7:29 AM Mar 20th Wondering if there is likely to be any work t do today. Might actually have to attempt some marketing
1:09 PM Mar 23rd I have just spent ages picking my favourite top 5 albums on facebook. Now I have finished and everyone can see, I feel a bit pretentious
7:58 AM Nov 24th Never ever get involved in a franchise I have signed a deal with the devil
As the FranBest article points out, this franchisee’s survival in the fiercely competitive printing industry is, at best, a longshot. Who could survive with such a lackadaisical and passive attitude toward building their business? And it’s almost a sure thing that this franchise owner will blame her franchisor (aka “the devil”) for her lack of success.
But who really is to blame here?
Is the franchisor or the franchisee the victim?
On the one hand the franchisee has taken up a franchise territory, is almost certainly not following the system, will likely default on her franchise agreement and will give the brand a black eye in that market.
On the other hand, isn’t the franchisor’s job to qualify franchisees, to weed out those who will not follow the system, to set realistic expectations and mandate the necessary level of promotion?
Isn’t it a franchisor’s obligation to, in essence, save some franchisees from themselves and replace their natural inclinations with a structured, mandatory business system that’s been proven to succeed?
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Admin asks "Who is the blame for franchise failures?" But, Admin knows that the only reliable statistics out there, (that are ignored by the business media and policy makers and "the powers that be") indicate that ALL small startup businesses, regardless of whether they are independent or franchised small businesses, FAIL at a rate of 50% at sometime within the first five years!
Maybe the better question would be: "Why do 50% franchisees survive the first five years and 50% fail, and whose fault is it?
Aren't the franchisors subsidized by regulatory policy because government knows that the franchisors, who use the franchisees as a resource, can somewhat beat these grim odds because the franchisee is supplying the capital and cheap labor and assuming an unfair share of the risk to build the business of the franchisor?
http://thegreatfranchisingrobbery.blogspot.com