Disadvantages of Franchising When You’re Not Ready: Top 5 Reasons NOT to Franchise

We talk with hundreds of business owners about franchising their business. More often than not, we turn these ambitious business owners away advising them against franchising. Why? Well just because you can franchise almost anything, it doesn’t mean everything SHOULD be franchised!! There are disadvantages of franchising when you are not ready (read more on this topic).

Over the years, we’ve heard it all! Here are the top five reasons why, in our opinion, a business should NOT be franchised. Read on!

1) The business is not in operation.

When a “business” is really just an idea, then there is no proof of concept. There may have been some research around the idea, but there are no transactions taking place, no money being made and really no idea if there is even a demand for the service/product being contemplated.

When a business is up and running (ideally for at least six months although this is not a requirement), this is a good indication that it works. After all, the primary reason why people buy a franchise in the first place is because the business is a proven concept. Very rarely is there an exception to this rule (for more of an explanation check out our article that talks about how long you need to be in operation before franchising).

2) It is just a “hobby business”.

George is a manager working full time at a pet store. On a whim, he decides to start cleaning fish tanks on the side. It’s something he is knowledgeable about, that is flexible for him and brings in some extra cash.

A “hobby business” is a part-time business that is not treated very seriously and done really more for fun (and some cash on the side). While the service may be unique, a quick check reveals very little effort is put into making this business work (check out our frequently asked questions to find out what you need to bring to the table to start franchising).

3) The business is NOT making money.

Too often we have talked with business owners who want to franchise because they think it is a way for them to make money since their current business is NOT making money.

Are you kidding? All we can say is that if the current business is not making money, why would you roll out a program setting someone up to fail (read this article to learn why franchising is not a good option for struggling businesses)? Franchising is about creating an opportunity for others to be successful at the business model you created.

4) The owner is a micro-manager or control freak.

Meredith owns a popular bakery and is the only baker in the kitchen. While she has many capable employees, she can’t trust anyone to run the baking process but her. Consequently, she makes more work for herself and is run ragged each day. She has her hands wrapped around the business so tightly that she can’t let go, train and trust others to learn her baking process. In this situation, the business itself may be an excellent candidate for franchising, but the prospective franchisor has a hard time teaching and letting go (learn about why franchising is not for control freaks). This is an example of the “no one can do it like I can” attitude.

Franchising is about teaching other entrepreneurs every aspect of the operation so these people can run their own business. If a business owner looking to expand wants ultimate power and control on day-to-day operations, then corporate expansion is a better way to go.

5. The business is not scalable or sustainable.

Richard handcrafts beautiful wood patio furniture from indigenous trees on his property in Idaho. He’s been successful selling pieces over the internet and is thinking of franchising.

In order to support franchise expansion, Richard’s business should be able to scale its operations. How will Richard’s franchisees get the specific wood needed to build the patio furniture? Besides the fact that resources are limited (his property in Idaho), it might be tough to find franchisees who want to hand make each piece of patio furniture.

Franchising is not for everyone or every business, but it can be a powerful avenue for growth when it fits! So, if you have a business that DOESN’T fit any of the above and is truly a business you feel can be franchisable, then contact┬áThe Franchise Maker or give us a call directly at 1-877-615-5177 and we’ll help you figure out if franchising is right for you!

Disadvantages of Franchising When You're Not Ready: Top 5 Reasons NOT to Franchise