Why do so many franchises fail?

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There are three main reasons why new franchises fail. Avoid these and you'll greatly increase your chances for success.

1. Capital Issues
The classic blunder for anyone entering a new business is to not have enough money available to cover all the needs. This not only means enough to get the business started but also enough to cover losses while the business is growing and to cover personal expenses while waiting for the business to afford to pay the owner. Make sure you've got significantly more than you think you'll need and you will have a much safer journey.

2. Marketing Issues
The bottom line of any new business is that you've got to attract a solid base of customers if you're going to succeed. If the marketing program isn't successful in doing so, or if you don't have the marketing program fully-funded, then you're going to have problems that the business probably cannot survive.

3. Franchisee Role Issues
Be sure you know what is expected of the owner in order for the business to be successful. If the franchisees role is to go out and sell the business to attract customers and all you want to do is stand behind the counter, there are going to be problems. In your due diligence, find out how the most successful franchisees spend their time and make sure you feel comfortable with those activities before selecting the franchise.
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