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Experts Shares The Major Challenges In Franchising A Business

In the insatiable rush to growing their business, franchisors often fail to foresee the major obstacles in their path

By Content Writer
Experts Shares The Major Challenges In Franchising A Business

Expanding a business is always a proud moment for every business owner. This accentuates the fact that you have accomplished success with your business. There are various models for expansion, but franchising is considered the best.

Franchising is at the zenith in this millennium. It is the most sought after business expansion model as it helps you to reach even at the unattainable locations without spending a fortune.

Mithun Appaiah, CEO Innovative Foods Ltd, Sumeru Frozen Foods, said, “With its minimized risk and already-established model, franchising will always be a viable model in India. Continued demand for branded products, India as a viable F&B market and the increasing number of first-time entrepreneurs in the country who opt for this model for their first venture will drive franchising in 2019.”

However, in the insatiable rush to growing their business, franchisors often fail to foresee the major obstacles in their path. Below are some of the major challenges franchisors can face while franchising their business.

Lack of Understanding in the Market

One of the major challenges that brands face is the lack of awareness & education in the market. Rewant Veer Singh, Franchise Sales Manager, Anytime Fitness India, said, “People should be more knowledgeable regarding the various models of franchising. There should be a certain amount of education to understand the basic difference of FOCO (Franchisee Owned Company Operated) and FOFO (Franchisee Owned Franchisee Operated) models.”

Lack of Brand Awareness

“Another major challenge company’s face while franchising their business is lack of brand awareness and explaining the feasibility of business. Take, for instance, we have around 93 franchisees in India and 80% are not from the industry. Thus, getting them to a point where they understand the business is a huge challenge,” added Singh.

High-Investment

High capital investment can be a big turn-off for many prospective franchisees. It is very important to ensure that the return on the investments of your franchisees is there all the time to grow a brand together with the franchise.

Vandana Bhardwaj, Director, Marie Claire Paris Salon, Nails, Wellness and Academy in India, said, “Investments in every industry are quite high for a lot of brands. It is very important to get the pricing right and if it is too high the arrow eye is not met which leads to pulling out of unhappy investors.”

Non-replicable Business Model

The most important characteristic of a franchise is that their business must be easy to reproduce. Franchising is all about replicating a successful business model. Once you’ve sealed the deal with franchisees, they have to learn everything about its operation within three months. Franchisees want to learn a business quickly because they’re using their capital to stay afloat while waiting for the business to take off. 

If your business model is too complicated to be taught and reproduced within three months, then franchising may not work well for you. Make sure that your business model can easily be cloned by the potential franchisees and the concept will work in a variety of markets.

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