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Why Franchises Fail — And How STOP Prevents That

If you’re considering jumping into the exciting world of owning a business, you probably have a million questions racing through your head. Naturally, some hesitations on whether you’ll find success will also occur. Should you start out on your own? Should you franchise? Will a franchise actually be more beneficial to you than starting from the ground up? It certainly presents many helpful components upfront, at least in terms of having access to a significant number of resources by jumping into a network of thriving companies.

“According to 2019 research based on official census data, the two-year franchise success rate is about 8% higher than the independent business success rate. The one-year survival rate for franchises is about 6.3% higher (Francine Lafontaine, Journal of Economics & Management Strategy).” Check out this Neighborly® article for more interesting franchise statistics.

Of course, not all franchisees will find success. Let’s discuss 5 common reasons why franchises fail, and how you can prepare and protect against a similar path.

5 Reasons Franchises Fail – And How You Can Prevent It

Poor Advertising

Marketing techniques vary between franchisors. If you’re considering joining a franchise network where you’ll be responsible for advertising to potential customers and trying to solicit new business without much support, it takes away from the time you’d otherwise spend overseeing operations and analyzing how to boost efficiency.

Reputable franchisors typically have an advertising fund that franchisees will routinely contribute to. Such is the case at STOP Restoration, where we take the marketing stress off your plate so you can focus on scaling your business. This doesn’t mean you can’t still do advertising if you desire – we provide training on marketing best practices to further ensure you’re set up for success.

Inadequate Training

Speaking of training, this is an area that can make or break a franchisee’s success. If you join a business without understanding or having access to training resources, you’re jumping into the unknown. Ongoing support is critical to maintaining a profitable and healthy business as you scale. It’s important to have support throughout your franchise journey for any bumps in the road. You should also expect to receive sound advice from those who are already finding success within your franchise network.

Our STOP Restoration instructors are renowned as some of the nation’s top restoration experts. We have over 40 years of experience building methodologies and sharing them with our franchisees. In fact, when we first started, STOP stood for Support Training Operations Processes.

When a new franchisee joins our team, we provide 20 days of Initial Training. It starts with a week in Southern California learning from our management and marketing trainers. Once training is complete, we provide supplemental training with online and in-person courses to continue the education process.

Franchise System Is Subpar

Industry plays a big role in this – is the industry you’re interested in one that people want or need? Is it successful? Joining a franchise network in an industry that’s not performing well ultimately sets you up for a very stressful business journey.

The restoration industry is a $200 billion industry, and it’s something people rely on for their health and safety, which means there is plenty of opportunity for growth. When you find a successful industry filled with passionate individuals, you can have more confidence in avoiding failure down the line.

Poor Location

When joining a franchise, you’ll be discussing the matter of where you’d like to operate from. First off, it’s important to check that your desired territory is available. Then, you’ll need to ensure that it’s a good location for you to obtain enough business and that another company can’t step on your toes.

STOP Restoration has large, protected territories for our franchisees. If your area is available, we’ll be happy to discuss how to know if your specific area is a strong choice.

Reluctance to Change

Given all the changes happening throughout the past few years, businesses need to adapt their techniques to stay relevant and continue bringing in revenue. When franchisors won’t or can’t change how they practice business, the likelihood of the company going under increases.

Through the years, STOP Restoration has found success in our industry through targeting both insurance and non-insurance paid work. While non-insurance work typically results in higher-paying jobs, insurance work keeps us balanced. Everyone needs property insurance regardless of how the economy is performing.

Are you interested in learning more about starting and succeeding at your own STOP Restoration franchise? Fill out a contact form – we look forward to connecting with you!