4 Ways to Overcome Top Franchise Challenges for 2015

Franchise establishments drove approximately 3.5% of the total U.S. GDP in 2014, and franchises alone employed over 8.5 million Americans. As it becomes tougher to make a profit as an independent business, entrepreneurs are learning to leverage the support that comes with being part of a larger franchise organization. In the coming year, I predict we’ll see the number of franchises in the U.S. continue to rise, but at a price. As the nature of franchise operations evolves, new operational challenges will impact entrepreneurs opting to open a franchise for the first time, as well as franchise owners trying to turn a profit.

It’s still an optimum time to jump into the franchising world, but remember that not all franchises are created equally. If you’re a franchisee prospect, do your homework and spend time researching typical challenges like staffing and recruiting, marketing and operations. No matter where you lie in the franchise process—from owner to newbie—consider these four challenges in 2015 and how to overcome them:

1. Healthcare Regulations. This year franchises will be up against a new set of healthcare challenges thanks to Obamacare and the regulations enforced around company provided healthcare. If your franchise has less than 50 employees, you are not required to provide coverage. Franchisees might opt to hire part time employees so providing health insurance is not required, and cost is reduced. Larger restaurant and retail chains with dozens to hundreds of employees at each location should consider the ramifications of the rising healthcare costs and become familiar with the newly instated rules and regulations.

2. Taxes and Operational Expenses. While franchisees have always paid income taxes, it’s becoming more common for states and cities to require a variety of “fees” in an attempt to increase their own revenue. Surcharges and inspection fees are popping up, and costs are rising. Examples include higher worker comp premiums, city business licenses, state contractors licenses, personal property taxes, and fire and occupancy inspection fees. It’s vital that franchise owners do their homework to understand what expenses are going to be incurred and how to best minimize those expenses.

3. Marketing Expenses. The battle to win customers is becoming more technology oriented and more challenging. Quickly diminishing are yellow pages, newspapers, and print media in general. A combination of web and digital marketing and cutting edge technology—ranging from point of sales systems to sales software—is required for success. State of the art mobile websites, social media strategies, and digital media will be necessary to set your franchise apart from the competition.

4. Hiring and Retaining Employees. It’s challenging to find quality workers with a strong work ethic, especially if your franchise requires manual labor or services. Attitudes of entitlement and laziness often plague franchisors. Invest time into hand-selecting employees who are committed to your vision, and who have no problem with working hard to get there.

Franchisees must be preparing for new healthcare regulations, new fees imposed by state governments, operational challenges and the hiring and retaining of employees. Franchises have an extraordinary opportunity to drive the U.S. economy, because there is strength in numbers. Despite the challenges ahead, franchise organizations offer support, technology, and information that is prohibitively expensive to the independent business owner.

By Chuck Pistor, CEO of Miracle Method.

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