| The concept of franchising is in itself a sound | | | | succumb to the pressure. |
| business idea. Many have become rich because of | | | | Other franchises ceased operations after some |
| it. However, not all franchise businesses become a | | | | time because they failed to obtain a firm |
| success story. There are several factors that | | | | commitment from central management to |
| may contribute to the problem. | | | | provide adequate, substantial, and continuous |
| Some franchise units, although parented by large | | | | support to the franchise. |
| corporations, failed to make the mark due to the | | | | Some failed to get the commitment of their own |
| failure of the franchisee to strictly adhere to the | | | | employees to support a new business strategy or |
| program and terms of the franchise. Following the | | | | develop new employee and management skills to |
| system of the company and the provisions of the | | | | help them cope with new market demands. |
| franchise agreement is crucial to the success of | | | | Failure to handle and manage change is also |
| any franchise unit because it is the essence of | | | | another factor in the collapse of a franchise. The |
| franchising. | | | | franchisee may not have sufficient insight about |
| Some companies venture into franchising with little | | | | the staff's resistance to change (new strategy, |
| experience and limited resources, hence they are | | | | management style or policies) to be able to |
| unable to develop an effective franchise system. | | | | detect it right away and handle the situation |
| Although they may be able to sweet-talk | | | | properly. |
| prospects into buying a franchise, some, if not all, | | | | Moreover, the franchisee may lack the required |
| of these franchises are doomed to fail because of | | | | knowledge in technology, operational systems and |
| the flawed system of the company. | | | | organization that he loses credibility among his |
| In some cases, the company did not place much | | | | employees. In such a situation, employee morale |
| attention and effort to market research specific | | | | will be low and a high rate of employee turnover |
| to the franchise because its main concern is selling | | | | can be expected. This dissatisfaction will certainly |
| as many franchises as possible, without studying | | | | reflect on their initiative and work quality, and will |
| what the ideal number of units in a given area | | | | be mirrored in the overall performance standard |
| should be to ensure success. | | | | of the unit. |
| The market is affected by many external factors | | | | Franchises may also lack adequate reporting and |
| that are beyond the control of business. These | | | | control systems particularly those that were |
| include the condition of the national economy, the | | | | abandoned by the parent company after the |
| outbreak of war or local civil unrest, market | | | | business has opened. Any business that does not |
| demand or shift in preferences, disease outbreak | | | | have a strict reporting and control system will |
| that affects raw materials supply, natural | | | | most likely be operating on vague estimates, until |
| calamities, or anything that would cause sudden | | | | it finally closes shop. |
| and significant decrease in the supply of goods or | | | | There are many reasons behind the failure of a |
| the market demand, or both. Unfortunately, | | | | franchise but all these can be avoided with a |
| business cannot do much about these conditions. | | | | thorough study of the company, its existing |
| The key to survival is adapting to prevailing | | | | franchise network, proper training, and strict |
| conditions and being able to take the blow, until | | | | compliance with the terms of the franchise |
| conditions are better. Sad to say, not many | | | | agreement. |
| businesses can do both so they eventually | | | | |