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3 Franchise Red Flags To Look Out For

Last year, there were more than 800,000 franchise businesses in the US alone, and experts suggest that those figures will climb even higher throughout 2024. We can’t get enough of franchise success. However, if you’re considering your first franchise, it’s important to note that there are good ones and some to Franchise Red Flags steer clear of. While this business model certainly gives you a firm foundation on which to stand, ongoing success is reliant on your business savvy. 

Key signs of a potentially questionable franchise opportunity include a poor business reputation and a high franchisee turnover. Lets look at other red flags to consider throughout your interactions with potential franchise companies. 

Something Doesn’t Seem Right

Trust your instincts and personal intuition when considering various opportunities. If you’re eco-conscious, something like poor recycling schemes or questionable supplier connections should send you running. Meanwhile, if you’re concerned with spreading healthy messages, avoid traditional fast-food franchises that use unhealthy oils, or cooking processes you struggle to get behind. 

Luckily, the sheer amount of franchise opportunities that are now available means there is a better way. Many franchise companies now practice green back-end processes, and you can even opt for a healthy food franchise that serves meals you can feel good about. You simply need to keep your wits about you and recognize when something doesn’t feel right. 

Minimal or Excessive Support

Franchise Red Flags Support with things like staff training and business setups are some of the best benefits of franchise life. However, this can also be a key warning area as to whether a franchise is the right fit for you. 

Be wary of a franchise that offers either too little or too much support to. For instance, as a franchisee, you can reasonably expect a franchisor to cover key costs like training and development. Think twice if you’re expected to pay for these things out of pocket. Equally, watch out for a company that wants complete control over things like employment, staff management, and day-to-day operations, as they could quickly become overpowering. 

Too Much Focus on Upfront Fees

While you need to pay upfront for franchise benefits like branding and products, avoid working with a franchisor who seems to only be focused on upfront fees. This is especially true if they’re pushing for high upfront fees but offering a small royalty package. 

These behaviors are red flags that a franchise might not be as viable as you’ve been led to believe. A truly professional and sustainable franchise opportunity will be centered around reasonable upfront costs, and a focus on ongoing, long-lasting royalty payments. 

It’s easier than ever to find the franchise of your dreams, but that doesn’t mean every prospect will be the right fit for you. Avoid these red flags to make sure you don’t commit to the wrong company! 

 

About Caroline Stewart

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