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Costly Mistakes that a New Franchisee Makes

: : Business Success, Franchise : ( words)

Costly Mistakes that a New Franchisee Makes

Wise people learn from their mistakes. Exceptionally wise people learn from other people’s mistakes. And these mistakes can appear on paper in the form of dollars. Your franchise will definitely come with manuals and training programs. However, as a newbie franchisee, you will tend to make choices without consultation that would make sense to you, but it could be the first domino to fall in a disastrous chain reaction.

Here are a few common mistakes that might just save your franchise from becoming the next business horror story. Take heed and tread with caution. Whether you are opening a pizza place, coffee bar or a fashion brand, we are serving a few wisdom cookies to chew on.

Negotiating Lease Terms

If there is one thing business owners want to do if they can go back in time, it is negotiating better lease terms. When your franchise is new and not making money, try to at least get the base rent free for the first few months. Get this parameter as low as possible and leave room for escalation in future years. The cost associated with real estate is of the biggest investments you make while establishing your business so time it carefully and negotiate hard.

Construction Costs

Do not just assume that building costs are what the contractor tells you they are. Do not just hire any contractor either. Your assumptions can prove to be very expensive. Use competitive bidding before hiring any contractor for construction in order to save a few thousand dollars.

Franchise Equipment

Many franchises, especially food outlets, need extensive capital to operate and this comes in the form of expensive equipment that could be anything from ovens to large scale printers. Often, franchisees have wished that they had looked for cheaper options or second hand machinery or refurbished deals. You can even look for financing options in order to conserve your capital for other core functions of your business.

Marketing Blues

This happens with almost everybody and you have probably heard a story or two regarding it. When you go to any advertisement agency (digital, print, TV or radio), with the marketing plan that the franchisor has penned for you to the detail of the last penny, these agencies will try to convince you to modify the plan to suit their own interests. And many business owners fall for this even though the franchisor’s way is flawless and has proven to be successful.


Not understanding how royalties work or how advertising funds and other payments are calculated and collected by the franchisor, can put you in a difficult position. These are significant ongoing costs that will appear as cash outflows while you run your business and should be accounted for in your business plan. Never underestimate these periodic expenses.

These points represent the story of new franchisees that suffered financial losses because of their negligence. To stop history from repeating itself in your case, take appropriate measures and consult your franchisor before making any major decision that can cost you–literally.


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About ActionCOACH

Brad Sugars founded the brand Action International in 1993. He realized there was a disconnect between business advice and implementation. The answer was Action! Brad Sugars created a business coaching company so that business owners throughout the world can realize their goals in business. Today the company is known as ActionCOACH. To learn more about business, visit Brad Sugars Review blog!


Brad Sugars started ActionCOACH in 1993 and today the company is internationally recognized as the leading global business coaching firm and one of the leading and most awarded franchises in the world. Today, ActionCOACH operates in over 70 countries and has more than 1,000 coaches around the world, coaching 15,000 businesses every week to bring them ever greater achievement and success.