Franchising is a matter of perseverance.

Every year, we speak to entrepreneurs who want to start a franchise formula. Most of them have a good idea, strong growth ambitions, and full confidence in the future. They see plenty of opportunities for the concept with which they have often achieved a lot of success themselves. Yet, very few entrepreneurs are capable of actually setting up a franchise formula of any significance. Why do so many formulas fail or get stuck with a limited number of locations? 

There are many causes to mention, but we want to highlight two important ones: 

Underestimating the necessary preparations

Firstly, there is the entrepreneur who thinks franchising can be done quickly. A manual and a contract are swiftly prepared since there are already 'very good' franchisees waiting who are eager to start with the concept. And perhaps he/she fears being overtaken by a competitor. Our advice to take time to prepare things properly is often met with a polite smile. Meanwhile, far-reaching promises have already been made so that the first two franchisees can start at once. A false start! Agreements are not properly documented or communicated, and the franchisor is, of course, still busy with their own business. Necessary guidance is lacking. Important aspects such as training and development and (parts of) ICT systems still need to be developed. If the results of the first franchisees are also disappointing, the initial enthusiasm quickly fades. It's a pity because with a bit more patience and planning, a successful start is much more likely. 

Lack of financial resources

Then there is the money issue. Setting up a franchise formula without a substantial amount of financial resources is impossible. Those who claim it can be done paint an unrealistic picture of reality. Most franchise formulas only realize profits from the second or third year after starting. Many costs, especially for expansion, ICT, and personnel, against limited income, result in losses in the first two years. Is this unusual? No. Every experienced entrepreneur, both inside and outside the franchise world, will agree that in the early stages, an investment is needed to reap benefits in the long run. Franchising is not a suitable organizational form for making a lot of money in the short term. Look at the successful formulas in the Netherlands. Most already have a very long history and have slowly matured into what they are now. 

Successfully franchising requires perseverance

To ultimately become successful, perseverance is required. Realize this before you begin. If you still choose to start, ensure you have sufficient financial resources and good relationships with banks, advisors, and fellow franchisees. They can provide you with advice where needed. Take these advices seriously, and the chance to grow into a significant formula increases significantly!