With any business endeavor, entrepreneurs seek success. We crave it. We desire it. We work our tails off to achieve it. Yet, to some, when they gain it…..they lose it all.
What do I mean?
Well, in the franchise context, you must be aware of the implications of having too much success. You might just capture the attention of your franchisor, which might not be a good thing.
A often ignored but dirty little secret in the franchise world is that too much success can lead to your franchisor wanting to take over your location and turn into a corporate location. After all, if you are having great success, the relatively small royalty you are paying back to the franchisor is not as appealing as taking over your franchise.
Now, they can’t do this. Well, at least not lawfully. But many try.
This actually happens more than you think.
You spend your money. Build your business. Make money for yourself and pay royalties to your franchisor. And then next thing you know, the franchisor is trying to take over your territory.
In most instances this is just pure greed. But it is also reality.
Let this be a warning: Your franchise success may kill your business!
Too much success can make you a target for a franchisor takeover.
When considering your franchise purchase, don’t forget to consider all elements of franchising!
And if you sense that your franchisor is trying to take over your territory, reach out to a franchise lawyer to help you protect what you have earned.
Franchising is a great model when done well. Make sure you research the most successful locations along with the worst locations to get a full understanding of the nature of the franchise and how the franchisor handles failure and success.