How to Avoid Franchise Failure in India? – Strategies or Tips


In this article, we will discuss various strategies or tips to avoid  Franchise Failure in India.

Buying out a franchise can fail or can be a successful one. It all depends upon your attitude toward the procedure of the franchise and your decision-making process.

Many franchise businesses provide great operational support and training programs to franchisees. But many do lack adequate resources and lack commitment toward the new franchisees.

You can also look for perfect franchise concepts per your strengths and skills that will bring success to your doorstep while others will not.

How to Avoid Franchise Failure in India?

Strategies to Avoid Franchise Failure in India

Franchisees must have a great understanding of both documents. It is recommended that the franchisee should take the attorney review before signing off the documents.

Not Exploring New Ideas or Business Options

While keeping a keen eye on many franchise opportunities, many people are drawn toward the allure of big and famous brands.

They do not show any interest in exploring small business opportunities. Do know there are many advantages related to the smaller business opportunities; they are less expensive but can bring great revenue.

The franchise industry comprises many more sectors than retailers and restaurants. Retail and food businesses are just a small portion of the franchise market.

Franchise opportunities include fitness, education, senior care, automotive and marketing services.

Some franchises are less expensive than retail and business concepts and can allow you to meet your business goals.

Read all the fine lines of Franchise Agreement

Remember, the licensing agreement you are signing with the franchisor will have a lot of fine printing or double meaning.

Franchisor always protects his interest in the business; you need to understand the fact and get the agreement evaluated.

You can negotiate some of these terms with the franchisor and put up your words, so you do not lose.

Lack of Flexibility

For franchising, businesses know that while buying a new franchise, you have to know that you are not allowed to make any amendments.

As a new franchisee, you cannot introduce any new product or service and be ready to work as per their rulebook.

Do know that if you sign off with a big successful brand, then be sure they will be strict and keep an eye on your every footstep.

They have a high customer base, bringing ready footfall to your store, but you will never be allowed to introduce anything of your own.

On the other hand, if you sign off with a smaller brand, you will not get a readymade customer base, your efforts will be high, and you will have to pay the royalty.

So, if you are going for a newly introduced brand, consider its pros and cons before making the final decision.

Neglecting Market Research

Once you find a renowned franchise, it is easy for you to get excited and forget about market research.

Many franchises offer great opportunities, but you need to go ahead and look for options, thoroughly investigate and speak to many existing franchisees and try to go through every minute detail posted on the internet about the brands.

The best part about the existing franchises is that they will provide you with first-hand experience and important insights, including the reality of running the business.

They will allow you to go through daily tasks that are a detailed and realistic evaluation of the services provided by the franchisor.

While knowing about many franchises, you need to check through the top ten franchises, including many lower, top, and middle performers, to help you out.

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Making a Hasty Decision

As a budding entrepreneur, you must be sure you have gathered information about the business opportunity for making decisions before purchasing it.

Market research helps people make informed decisions before investing a lot of energy, money, and time in the business, and you have been through all the business you have ahead.

Existing Cash Flow

The business will not be generating cash flow since its start. Be ready that there will be no cash flow, at least for the first 18 months.

As franchises reach their break-even at different points before generating profits, they need sufficient capital to cover their expenses and operating expenditure.

Upon the first franchise opportunity, many banks don’t look ahead for what else to offer. Compare different franchise concepts before you know what is best for you.

Have a look at Failure Rate

Although you will meet some franchise owners to learn about the brand, there are always some franchises that were closed before you could visit them.

For the same, you should look on the internet and know why the past franchises have failed and the issue behind the failure.

What was the factor at fault if it was positioning, product, support, or pricing? It would help if you tried to know.

Never Hire a Free Franchising Consultant

Many agencies or individuals can come up with many lucrative offers for you. The offers can be like we will get your freebies, less investment, more money, etc.

Never come under these lucrative offers, do your research and analysis before signing.

Most of these consultants derive commissions from these deals, and there are chances that you will give the wrong advice as well.

Thinking that you are your Boss

Buying a franchise to start your own business doesn’t mean you will have complete autonomy.

This will never be the case with a franchise, as most franchises have a strict rulebook that they must abide by.

The advantage here is that you are not required to spend valuable time building brand value or testing new things in the market. You need to stick to the guidelines sent to you.

Opening a franchise is not the right plan to gain full power over your business. If you fail to follow the franchise guidelines, then the chances are high that your franchise agreement will cancel.

But if you don’t want anyone telling you what to do, owning a franchise may not be right for you. Because if you fail to follow franchise guidelines, you may have your franchise revoked.

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How to Avoid Franchise Failure? Conclusion

It would help if you avoid the above-listed common franchise pitfalls to increase the chances of succeeding with the franchise.


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