Why Are Some Franchisees Successful While Others Fail?

When buying a franchise, one major goal that you are attempting to achieve is to select the right franchise and maximize your chances for success. It makes sense and along the way you will consider various franchise opportunities and franchisors. But as you go through the process, I would like you to also consider one extremely common occurrence that can prove instructive and helpful in your franchise selection process.

Within franchise systems themselves, many times there are winners and losers. That is, within the very same franchise system you could have two franchisees who operate in extremely similar markets, and yet, one is extremely successful and the other a failure. That is, why do some franchisees succeed and other franchisees in the very same system fail? Why can one franchisee earn over a million dollars a year in gross revenue and the other franchisee (again, in the same franchise system) only earn $300,000 in annual revenue?

Well, buying a franchise and franchise success is not a science, so I don’t have an exact answer for you; however, I do have some insights that you should consider as you evaluate the right franchise opportunity for you:

1. Understand that Success and Failure Always Exist – Within the very same franchise system there will be successful franchisees and the not so successful failed franchisees. What does this mean? Well, it means that success is never guaranteed and it also means that there is variability in the franchise success model and a major part of this “variable” is you, your available capital, and the skill set that you will be bringing to the table. So, before you select a franchise, it is important that you not only evaluate the successful franchisees but also the ones that have not been successful.

2. You Just Can’t Blame the Franchisor for a Failed Franchise Location – Let me be careful with this point and guide you through it the best that I can. You see, again, starting with the question, “How can a franchise system have successful franchisees and, in almost identical markets, also have unsuccessful franchisees?” You need to understand that a lot has to do with the actions of the individual franchisee himself or herself. So, before buying a franchise system consider the variability of “you” and how the franchise system may work for you and what you will do with it. Consider your personality, your skill set, and your position in life and determine whether or not you will be a good fit.

For example:

• Will you be working full time in the franchised business and, if not, can the franchise thrive with a part-time owner?
• Does the franchise require extensive reserve capital to ramp up business and fund operations during the development process and do you have the needed capital?
• Does the franchise require an intensive sales process and are you equipped (both in personality and skill set) in actively marketing and promoting your franchised business?

You definitely need to consider and evaluate multiple franchise opportunities and franchisors but once you select or believe that you are going to select a particular franchise opportunity it will now become time that you start evaluating the success and failure stories within that franchise system. Sometimes you learn a whole lot more from evaluating a franchise failure story than a success story and sometimes a franchise failure within the “right franchise system” may provide insights as to why the franchise opportunity may be right for you.

Either way, always understand that there are successes and failures within the very same franchise systems. Your job right now is to gain insights as to why they occur. No easy task and never a science but definitely worthwhile to consider.

By Charles Internicola January 19, 2015