1851

The world of franchise sales has no shortage of challenges — convincing someone to invest their life savings in a business started by someone else certainly isn’t easy. And as franchisors look forward to a&nbsp;<a href="https://1851franchise.com/covid-19-and-high-unemployment-set-up-2021-for-franchise-sales-feeding-frenzy-2714528">post-COVID world</a>, it has never been more important to keep those potential challenges in mind and prepare accordingly. Here are three of the most common difficulties in franchise development right now.&nbsp;<h4>Finding the Right Candidates&nbsp;</h4>The long-term success of any franchise business rests on the quality of its franchisees. Emerging franchisors often feel pressure to market to the largest number of people or sign the first prospect who shows interest.&nbsp;“A common mistake emerging franchisors make is taking the first person who is willing to write a check,” said&nbsp;<a href="https://frannet.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=3-biggest-challenges-in-franchise-development-2719224" target="_blank" rel="nofollow">FranNet</a> vice chairman and principal&nbsp;<a href="https://www.linkedin.com/in/bnicol?utm_source=1851franchise.com&utm_medium=article&utm_campaign=3-biggest-challenges-in-franchise-development-2719224" target="_blank" rel="nofollow">Blair Nicol, CFE</a>. “That is the wrong thing to do — the first few franchisees will be the&nbsp;<a href="https://1851franchise.com/what-strong-franchisee-validation-looks-like-2712150">validators for future franchises</a>.”This hasty strategy can also be a costly mistake in the long run as the wrong franchisees can slow down growth for the brand or create unnecessary challenges. Franchisors should do their due diligence and outline their ideal franchisee profile to be more discerning when evaluating prospects.&nbsp;“Initially, you have to find extremely strong franchisees that are also going to have a passion for the brand,” said&nbsp;<a href="https://www.bizfranhub.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=3-biggest-challenges-in-franchise-development-2719224" target="_blank" rel="nofollow">BizFranHub</a> co-founder and managing partner&nbsp;<a href="https://www.linkedin.com/in/jonathanmpace?utm_source=1851franchise.com&utm_medium=article&utm_campaign=3-biggest-challenges-in-franchise-development-2719224" target="_blank" rel="nofollow">Jonathan Pace</a>. “They need to be your&nbsp;<a href="https://1851franchise.com/what-strong-franchisee-validation-looks-like-2712150">brand ambassadors</a> — spokespeople who are going to tell the next wave of franchisees how great the opportunity has been. If franchisors go out and spend a ton of money on large-scale, generalized marketing campaigns, they might end up with franchisees who have the money to invest but might not have the real passion that will drive growth to 100-plus franchises in the future. Don’t be so eager to sell those first few franchises.”<h4>Inadequate Support Structure</h4>Franchisors can’t overestimate the importance of having a&nbsp;<a href="https://1851franchise.com/what-type-of-support-should-franchises-offer-franchisees-2717870">strong support infrastructure</a> and a replicable business model in place. Although they are entrepreneurs in their own right, franchisees choose to franchise because they want (and need) those support systems, processes and procedures. Often, franchisors may enjoy a fast influx of new signings in the beginning but don’t have the infrastructure in place to support that growth.&nbsp;“Prospective franchisors need to create a system of procedures and operations that somebody else can follow,” said Nicol. “It may not be polished or totally complete, but they need to document how the business started, how it should be run, how it should be staffed and more.”For example,&nbsp;<a href="https://1851franchise.com/5-common-operational-blunders-and-how-to-avoid-them-2708113">an operations manual</a> with product lists, employee handbooks, vendor tips, storefront appearance guidelines and more will need to be provided to each franchisee. From there, emerging franchisors need to hire a good, tenured corporate support team to provide ongoing support and training to all new franchisees. They also need to be aware of how far away they can realistically stretch that support.&nbsp;“From a support level, young franchise brands also need to grow around where they are based,” said Nicol. “If a franchisor is based in Portland, Oregon, for example, the first few franchisees need to be in the Pacific Northwest to promote regional growth.”<h4>Insufficient Funds</h4>Franchising a business is expensive; there is no way around it. This barrier to entry is one of the most common challenges in franchise development. In general, franchisors can expect to pay at least&nbsp;<a href="https://1851franchise.com/cost-considerations-when-franchising-your-business-2485#stories">$100,000</a> in legal fees, operation manual costs, trademarking, training, registration, FDD creation, marketing and more before they ever sign their first franchisee. Most business owners who have only opened up one store may not have that kind of capital lying around to spend.New franchisors may also underestimate these costs, especially in the initial stages of growth of the brand. Additionally, franchisors need to have some financial wiggle room, as it will likely take a while to recoup the initial costs outlaid in launching the franchise. Without the proper capital, the franchisor can wind up with no funds to support the next stage of expansion.“Typically, a franchisor does not become royalty sufficient until around 75 to 100 open units,” said Nicol. “That means it takes quite a bit of capital to create and grow a franchise successfully. Sometimes a franchisor will also hold on to their pilot location for too long. Oftentimes, franchisors will need to sell their pilot location and use those funds to focus on the franchisor side. ”With the right plan in place, franchising can increase a company’s revenue through franchise fees and royalty payments paid by the franchisee, as well as expand brand recognition as the brand reaches new markets and customers. But up-and-coming franchisors should be wary of these common challenges and ensure they are truly ready to embark on franchise development.

3 Biggest Challenges in Franchise Development

1851 Franchise

Whether it be insufficient funds or signing the wrong franchisees, emerging franchisors make several common mistakes when starting their franchise journey.

3-biggest-challenges-in-franchise-development

The Cleaning Authority

Franchise Journal Magazine: The Cleaning Authority Sets the Standard in Residential Cleaning

cleaning-authority-franchise-journal-feature

TruBlue Home Service Ally

Build a Business That Supports Your Lifestyle Goals With TruBlue Home Service Ally Franchise

 trublue-home-service-ally-lifestyle-franchise-success

Layne's Chicken Fingers

Photo of Layne's Chicken Fingers restaurant with "Now Open" inflatable on roof

Layne’s Chicken Fingers Opening Blueprint Drives Success From Day One

franchise-opening-playbook

Right at Home

Veterans, Army, Navy, Right at Home franchisees, Veterans Day

Veterans Excel as Right at Home Franchisees: Here's Why

veterans-in-franchising-right-at-home-success

Why This Corporate McDonald’s Rep Decided To Open His Own Franchise With The Cleaning Authority

kent-lewis-franchise-success

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

houses, Why Top Franchises of 2025 Outperform Independent Businesses

Why the Top Franchises of 2025 Outperform Independent Businesses

how-franchises-outperform-independent-business-2025-tech-data

Photo of Happinest Brands teams standing together in front of branded vehicles

Happinest Brands Continues Strong 2025 Trajectory With Major Q3 Growth and Strategic Wins

happinest-brands-q3-franchise-growth

Franchise Owners Step Up To Support Communities During Government Shutdown - 1851 Franchise

Franchise Owners Step Up To Support Communities During Government Shutdown

franchise-community-support-shutdown

Slim Chickens Opens R&D Center at World Headquarters To Drive Menu Innovation

slim-chickens-rd-center-fayetteville

Nearly 40% of Americans Are Eating Out Less as High Prices Redefine Dining Habits

nearly-40-of-americans-are-eating-out-less-as-high-prices-redefine-dining-habits

NJCAR v. Ford - New Jersey Supreme Court Limits Standing Under Franchise Practices Act

New Jersey Supreme Court Limits Standing Under Franchise Practices Act

new-jersey-franchise-practices-act-njcar-v-ford

A Practical Playbook: Who To Call First When Franchising Your Business

franchising-your-business-who-to-call-first

image of jerome hanway from right at home Las Cruces, New Mexico 1851 franchise franchisee spotlight

Jerome Hanway Is Building His Right at Home Franchise Around His Mission To Serve

right-at-home-franchise-las-cruces-jerome-hanway

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

image of franchise deep dive from 1851 franchise on doody calls franchise authority brands

DoodyCalls Franchise Costs, Fees, Profit and Data for 2025

doodycalls-franchise-deep-dive

image of michael panos and michel panos, owners of mellow mushroom in Atlanta

The Panos Family’s Role in Preserving Mellow Mushroom’s Character — and Expanding in Atlanta

mellow-mushroom-franchise-panos-restaurant-group-metro-atlanta

3 Biggest Challenges in Franchise Development

MORE STORIES LIKE THIS