The Truth Why Some Franchise Businesses Fail (And What You Can Do Not To)

The following article from :

Andrew Kolikoff;   Business Breakthrough Mentor and Coach

Follow him at:Click for Andrew’s LinkedIn Page

According to the latest statistics, 82% of new franchise business owners have never actually owned a business before.  While many have been successful in job  or in life, the fact remains most have little to no experience running a business.

Now while franchisors are very well aware of this fact, they are also aware that a week or two of systems and operational training (provided of course by the franchisor) cannot make up for years of business ownership experience.


So the burning question is, how can an industry and system that is responsible for almost 15% of the United States Gross Domestic Product actually believe that one to two weeks of training properly prepares future business owners for success?

Let us briefly use tennis as a metaphor… We know that to become a great tennis player you have to hit a million balls.  There is no short cut.  You can’t simply pay for a week or two with Andre’ Agassi and then immediately become a successful competitive tennis player.  You still have to train, struggle some, and yes, hit a million tennis balls.  So, while Andre’ Agassi over the course of a week or two can help you find your way and the path to rapid improvement… the truth is he cannot make you a tennis player.  He cannot hand your dream outcome to you.  He can certainly improve the potential for your game but that potential has still yet to be realized through first practicing the fundamentals.  When many of the fundamentals are mastered, then you practice more advanced techniques.

The answer here folks is this… while we all know franchising works and works reasonably well (for most)… the reality is it could work better… a whole let better.   And, the definition of a whole lot better (to us) means remarkably fewer franchise failures… remarkably fewer languishing franchises, remarkable bottom line results sooner rather than later.

So, if we can agree… while cramming works and is working, can we also agree that it certainly is not optimal?  The question now is… what is optimal and how do we create it?  And while you might be inclined to believe that some form of continuing education and training would be the answer or solution, the reality here is, it is prohibitively expensive to design and deliver.  Most notably though continuing education still is missing the one key ingredient we have found to be critical for accelerated and sustainable success – accountability.  (More on accountability later.)

Here’s another metaphor… Imagine never having flown a plane before but being responsible for now piloting a large commercial passenger jet (with a lot at stake of course) from New York to Los Angeles.  While you have a lot of help in terms of navigational technology, you still have to know what you are doing… right?  Well here is the real truth of why most franchises fail.  And no, it’s not because of:

  • poor financial forecasting (running out of money and/or not enough to start with),
  • no real sales strategy or a budget to afford and execute upon one or,
  • an inability to find and keep good people.

These are the common symptoms and not the cause or reason (as you have told or previously thought) why a franchise business will fail.  Many of course have formulated a prescription to ameliorate these ills however, that prescription again is only focused on eliminating the symptoms but it won’t truly fix the problem.

Ok, now back to the commercial passenger plane… because you have never flown before the chances of you plotting your course to LA accurately is of course slim.  In fact, the odds are you will likely go off course (off course for a while in fact).  Some pilots will realize this sooner than others and quickly correct course.  Others, most, will continue heading off course.  Unfortunately however, by the time most realize they are off course, a directional change or re-position won’t help.  They won’t make it to their destination because they will run out of fuel.

Running out of fuel metaphorically speaking means running out of money and time!  So, it’s not that you necessarily didn’t have enough money to start… it’s that your start, your trajectory from the outset was off course.  And, the more you followed that course, the more you moved away from your destination.  Off course means again (metaphorically speaking)… operational inefficiency, poor leadership, ineffective planning and controls, etc.  By the time you address these matters quite some time has expired with you continually investing in the business.  Changing course now, as you know will take time… but now you don’t have time… you need answers and fast.

So, the real reason why franchises fail is not because of money, sales, or resources.  No!  The real reason why franchises fail is because the business owner did not have the insight, the wisdom to know that they needed help from the beginning.

Trajectory therefore not only matters… it means everything!

(Or, The Answer To Eliminating Virtually All Franchise Business Failure)

Don’t only invest in the business, invest in yourself!  Find a mentor.  Find a mentor who is experienced and keeps you accountable from day one (not when it is too late).

It is a statistical proven fact that significantly more franchise business owners find success when mentored than not.  The numbers don’t lie… statistics clearly tell us that when goals are established and shared with a mentor, and that mentor keeps a franchise owner accountable to them, the chances of achieving those goals are not only increased… they are doubled!

Listen, the cat has been out of the bag for a while now.  Most know that mentoring works!  For those that don’t has it ever occurred to you that MOST of societies best, most successful individuals are mentored and coached?  The best leaders, the best athletes, the best musicians, the best chefs, the best inventors, the best engineers, the best human beings – most everyone was mentored for an extended period of time at some point in their personal, professional careers and lives.  For some reason however, most of the rest of us don’t know this and the few that do, don’t truly understand the importance of it.

Unfortunately however, the many  franchisors who do and have known this for some time and are already offering mentoring and mentoring programs (and we believe more are these days than not), they largely have been ineffective (or only marginally effective – more helpful in improving morale than actual bottom line).  And, the reason this true is because of some key mistakes or oversights.  Here is what we have found to be…

The 10 Most Common Mistakes Franchisors Are Making With Their Mentoring Programs and In Their Approach

  1. Most Franchisors are not taking a modern, more effective approach – mentoring both the individuals and their business and then cohesively working them together in a manner that ensures success.
  2. Most Franchisors are not properly vetting – finding exceptional/gifted mentors.
  3. Most Franchisors mistakenly believe a good mentor is tasking existing “successful” franchise owners to mentor those that are not (successful).  Most often however, these “successful” franchise owners wind up only offering advice… no structured, systematic goal setting, accountability and progress reporting.
  4. Most Franchisors are not effectively preparing their franchisees to be mentored (YES, it does take two and therefore some preparation.)
  5. Franchisors we’ve noticed are sometimes missing the all important accountability part (this is critical!).
  6. Most Franchisors don’t know how to look for and measure key milestones nor track progress.
  7. Most Franchisors often don’t know how to provide reporting on these deltas in a manner that matters and counts.
  8. Most Franchisors often don’t offer an approach to mentoring that turns around businesses and lives!
  9. Most Franchisors don’t know how to accomplish measurable, reportable results in an affordable manner.  One that pays for itself many times over!
  10. Most Franchisors don’t know how to systematically and affordably scale such a program.

A good mentor will feed you more and more tennis balls to hit.  The more you hit, the better you get.  A good mentor will be there during the good times and the bad.  A good mentor will make sure that your trajectory (your plane) never veer’s too far off course.  A good mentor will give you that other set of eyes and ears for improved wisdom and foresight.  A good mentor will be committed to your success and the intricate details of your business toward that success.  A good mentoring program, one that not only offers guidance and advice but also administers tools, training, accountability and reporting… reverses failure, diminishes struggle, effectively and efficiently builds the habit and culture of what it takes to be a success franchise.  A good mentoring program is fundamentally designed and administered to pay for itself many times over.  A good, effectively administered and managed mentoring program changes not just business, it changes LIVES.