The Franchise King®

Franchisees: How To Avoid These 3 Big Money Mistakes

franchisee just found a money mistake

By Meghan Mitchell

Although franchising can be a lucrative and rewarding way of owning and operating a business, there are 3 big franchisee money mistakes today’s franchise owners need to avoid.

(This post may contain affiliate links. Please read my disclosure policy).

But before I go over these big money-related mistakes you need to avoid if you become a franchisee, I want to discuss some basics.

Avoiding Franchisee Money Mistakes: You’re Getting Years Of Previous Experience

To begin with, when you buy a franchise, you are instantly purchasing years of business ownership solutions. These include:

  • Brand recognition: As a franchisee, you’ll benefit from having a well-known and trusted brand behind you. Customers often prefer to do business with familiar and reputable brands. This can give you a competitive edge over independent businesses.
  • Proven business model: One main perk of buying a franchise is having access to a proven and tested business model. It has been fine-tuned for the most success.
  • Training and support: The comprehensive training and support you’ll receive from the franchisor. You’ll get top-level, thorough training on how to operate your franchise business. You’ll learn technical skills and customer service standards. You’ll also get ongoing support. This includes marketing, advertising assistance, and product procurement and much more.
  • Scalability and growth: If you have ambitious goals and want to build a massive business empire, franchising can offer you the scalability and growth potential you need. You can start with one franchise unit and grow it one by one. Alternatively, you can sign a multi-unit franchise agreement upfront. This gets you discounted franchise fees. You can also diversify your portfolio. This can be done by investing in different franchise brands and industries. Just make sure they don’t compete with each other.

All good, right?

Now I want to talk about some potential money mistakes you can make when you’re a franchisee.

Money Mistakes Franchisees Need To Avoid

As good as franchising is, it also has its own set of challenges and risks. These can affect your financial success and satisfaction. As a franchisee, you need to be aware of the common financial pitfalls that can derail your franchise journey. Let’s avoid them, okay? Here are 3 of the biggest ones:
  • Not having enough capital or underestimating the franchising costs.
  • Not seeking professional advice or support from experts.
  • Not participating in the system conferences, training, and networking events.

Let’s talk about these.

Do You Have Enough Money?

Let’s start with the first one: not having enough capital or underestimating the franchising costs. This is a common mistake that can ruin your franchise dreams before they even begin.

That’s why you need a realistic, detailed estimate of how much money you need to start and run your franchise business. You also need a plan for financing it.

But how do you know how much money you need, and where to get it?

That’s where the second one comes in: not seeking professional advice or support from financial experts. This is another mistake that can cost you a lot of time, money, and headaches.

Get Expert Advice

You need to have a team of experts who can guide you through the complex and challenging process of franchising, and help you make the best decisions for your financial success and satisfaction.

One of the people you need on your franchise buying team is an experienced, ethical franchise professional. Someone who can help you find the best franchise opportunity for you, based on your skills, interests, goals, and budget.



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Use An Attorney

Next, you should use a franchising attorney. Someone who can help you review the FDD. They can also help you make sense of the contract and maybe even negotiate on your behalf with the franchisor.

Use A Financial Advisor

A funding expert who specializes in small business ownership can help you explore, evaluate, and choose the best financing option for your franchise business. They will base their advice on your needs and preferences. 

As a Financial Advisor, I’m here to help you assess your financial situation. I will also compare funding options against your business strategy. I can help you manage cashflow and reduce costs long term. I can also help you with wealth transfers and ensuring you stick to the plan. Additionally, I can help you leave a legacy free from business risks.

Franchisees Need To Take Advantage Of Networking Opportunities

As a franchisee, you need to take advantage of the local networking opportunities in your community and area. Doing so can help you make more money as a franchisee.

Also, you must take advantage of the networking opportunities that the franchisor offers.

Learn everything you can. Keep growing your online and physical presence as that compounds over time.

That means making sure you attend franchise conferences. These are valuable opportunities to learn from the franchisor, the experts, and the other franchisees.

These conferences are where the franchisor and the franchisees gather to share information, updates, and best practices about the franchise system. They also provide recognition, awards, and incentives to the top-performing franchisees.

Local/Online Networking Events For Franchisees Who Don’t Want To Leave Money On The table

One of the biggest money mistakes franchisees make is their failure to participate on local networking and community events. Essentially, If you don’t engage locally, you’re leaving money on the table.

There are events where you, the the franchisee, can connect and interact with potential customers, suppliers, and/or partners. They include social media groups, forums, blogs, podcasts, or actual live events and local business showcases.

By participating in these events as a franchisee, you can:

  • Learn from other small business owners and experts who have different perspectives and experiences than franchisees.
  • Expand your network and reach to potential customers, suppliers, or partners who may not be aware of or interested in your franchise brand or system.
  • Support and contribute to your local community and economy, and build goodwill and reputation among your peers and customers.

By combining these events with franchise system events, you can maximize your learning and networking potential, and grow your franchise business.

After all, that’s what it’s all about!

 
get financial advice from meghan mitchell

(Meghan Mitchell is a financial advisor, a successful entrepreneur, and an avid investor. She has over 4 years of experience, and she’s helped thousands of people just like you create and grow profitable businesses and have a balanced and fulfilling lifeLearn more about Meghan.)

Disclaimer: Provided content here is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.

Meghan Mitchell does not provide tax or legal advice. For answers to specific questions and before making any decisions, please consult a qualified attorney or tax advisor.

Not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare & Medicaid Services, or any other governmental agency.

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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

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