Why Franchises Fail

you’ll notice today we got it written in red why is it written in red well we’re going to talk about the untalkable and that is sometimes franchises fail why does a good franchise fail well i’m here to tell you there are really two specific reasons that a franchise will fail if it’s in a good system if it’s now if it’s not a good franchise system that’s a completely other story but we’re talking about good franchises here because in every network no matter how good the model is and no matter how established the brand is there are times when it just doesn’t work out uh so what are the two reasons well number one if you invest in a franchise trust your investment trust the brand trust the business model because the first and most common reason that a franchise fails in a good model is that the franchise operator does not trust the system and does not follow the model okay so let me say that again the number one reason is they do not follow the model you’ve invested a lot of money trust your investment okay this is a system that works or else it wouldn’t be there okay so the number one reason what’s the second reason this a little bit tougher but the second most common reason that a franchise fails is the franchise operator comes into the system under capitalized so there’s enough money to get in but the key to growing a successful business is that when it comes time to expand your business you must have the financial ability to do that and oftentimes that’s a hurdle that people cannot get over so think far-reaching in your business planning understand that there’s going to come a time when you need the capital to expand your business and make sure that when that time comes you are ready to expand so again two reasons number one don’t follow the model number two under capitalized other than that if there’s a reason that the business is filled it will typically fall into one of those buckets