Pitfalls to Avoid: Common Mistakes Made by New Franchisees

Becoming a franchisee is an excellent opportunity for you to run your own business.

However, as with any financial venture, it’s not a risk-proof endeavor, and it holds many pitfalls that you want to avoid. Yet, the fact that a tried and tested franchise model exists should be enough to provide guidance to new franchisees about how to avoid common mistakes.

Read on to learn more about what you want to avoid to ensure your business venture is a successful one.

Underestimating the costs

The first common mistake that a new franchisee can make is to underestimate the financial commitment required. Each franchise model, although proven, comes with its own set of costs, ranging from franchise fees and royalties to operating costs and so on.

These financial burdens can be quite substantial and should never be underestimated. That’s why, before you commit to running a franchise, you should conduct a thorough financial analysis.

Why is this step important? Because it will give you a clear picture of your financial obligations, and second, you will better understand

Moreso, instead of offering you the whole cost, which would include overhead like working capital and legal expenses, a franchisor might only quote you the franchise charge.

That’s why it’s important to always ask for a detailed list of everything that is covered and add any additional expenses that might be incurred. It is always better to overestimate than underestimate when determining an exact quantity is difficult.


The second most common mistake new franchisees make is to overexpand too quickly. Why is that such a big deal? Often, a franchisee (in their eagerness to expand) will open multiple locations without first truly considering the implications of that move.

Overexpanding can really strain your resources in the beginning. Furthermore, it can lead to operational inefficiencies and dilute your overall focus. That’s why it’s one of the most dangerous errors a new franchisee can make in the beginning.

Sure, expanding quickly sounds enticing and promising. However, it’s much more important to lay the foundation for sustainable growth and put off expanding until after that has been achieved.

Letting the standards drop

This is probably the worst mistake that can happen to your business.

Letting the quality drop can mean substantial financial losses, and if not corrected, it can even lead to your business venture failing completely.

That’s because, in this day and age, clients can always take their business to your competitors if they don’t feel they’re getting what they’re paying for.

Even further, they won’t be forgiving if your standards drop, for they can use social media to let others know, which can be very damaging to your business.

It will also undermine your relationship with the master franchisor, which is something that you do not want as a young franchisee.

That’s why maintaining high standards is paramount to success in franchising. So, do everything in your power to maintain a strong brand reputation and customer loyalty through consistency.

After all, excellence is a habit.

Poor communication within the team

This one might be obvious, but it’s still crucial to say it. Without good communication within the team, operations will not run smoothly, and many misunderstandings and inefficiencies will occur.

Sometimes that can even lead to conflict within your organisation, which is something you definitely do not want.

That’s why it’s important to have strong communication within your team, encourage dialogue, and ensure everyone understands their roles and responsibilities.

Failure to seek appropriate legal advice

New franchisees and pretty much anyone who isn’t a lawyer tend to be unfamiliar with lots of legal terms.

However, this makes it doubly important that they familiarise themselves with them, so they avoid making this common mistake because, as it turns out, it can be quite costly, even if not immediately.

Failing to seek expert legal help can have many negative consequences down the road that can otherwise be avoided. The solution to all this is to consult a trustworthy and seasoned lawyer who has experience in franchising.

The sheer number of people who buy into a franchise without having a counsellor go through the contract with them and explain the finer points to them is simply astounding.

Becoming a franchisee is a huge commitment, which requires lots of money upfront, which is often secured with assets, such as your house. Not to mention anything about the time frame you’re going to run things, which can be up to anywhere between 10 to 20 years.

That’s why it’s crucial to familiarise yourself well with any legal agreements. Seeking legal advice so you know what you’re walking into is simply a must. It can also give you a clear picture of what to expect should any disputes arise between you and the master franchisor.

Whether you run a gardening or carpet cleaning franchise or something else, to become successful, it’s important to remember one thing–you have to ultimately follow the franchisor’s guidelines, and that is part of your contract.

Remember, it’s crucial to read important legal documents personally, from start to finish, and ask your lawyer any questions wherever something is unclear.

That’s the only way to ensure most unpleasant surprises do not occur down the road and to avoid this common mistake new franchisees often tend to make.

Focusing on short-term goals only

Prioritising tasks and pursuing them so you score quick wins feels good and provides a sense of progress and accomplishment. However, that’s not really sustainable if it’s not part of a long-term vision.

The perfect blend of success includes a balance between short-term goals and long-term vision. Pursuing worthy greater goals ensures your franchise’s growth. This step always begins with making and then following a comprehensive business plan.

Ignoring the marketing plan

Your franchisor will often provide you with a marketing plan that’s specifically tailored to your market and specific circumstances.

That’s why, as a new franchisee, it can be a great mistake if you decide to ignore it, for that can lead to many missed opportunities and also hinder your growth.

If the marketing plan isn’t as detailed, you can adapt it to your specific market circumstances, so long as you follow the main points in it. Be sure to engage with your local communities and create a strong online presence if you can so you can attract and retain customers.


So, these were some of the most common wrong decisions when it comes to running your own business as a new franchisee.

By knowing these pitfalls, you will be better equipped to avoid them and turn your financial endeavour into success.

Use that knowledge to learn from the mistakes of others and create a thriving franchise that stands the test of time.