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Top 5 reasons why franchises fail and how to avoid them

Five factors that can contribute to the failure of a franchise, and five ways Winkworth can help in combating these...

There are many reasons why going down the franchise route is a good way to grow a business, however not all franchises succeed.

Below are five factors that can contribute to the failure of a franchise, and five ways Winkworth can help in combating these:

  1. Inexperienced staff:
    Your staff are your greatest assets. It is important to take the time in recruiting the correct people to help maintain and grow your business. At Winkworth Head office, our Head of Academy Emma Hogan runs a recruitment department as well as our in-house training. She can help you to recruit all levels of staff and then take them through our compulsory induction training programme upon starting, as well as continuing to train them throughout their time at Winkworth.
  2. Lack of working capital:
    Never underestimate the cost of setting up a business. It’s more important to overestimate how much capital you will need rather than to underestimate to the detriment of your office. Winkworth have been franchising throughout the UK for over 40 years so have a good understanding of the funding you will need to set up as well as how much you will require to continue to support your business financially until you start making profit. We also have good working relationships with many of the banks, namely HSBC, who all have franchising departments and can help with loans.
  3. Wrong office location:
    Your office location will be the ‘beacon’ for your business. Most agents tend to stick together on the high streets but this is not necessarily the correct thing to do. Our New Franchising team can help to locate suitable locations for your office. As well as doing their own investigations of offices, they work closely with a few commercial agents who can aid in sourcing and touting units. Once a good unit is found you will work with the Winkworth in house marketing team to design and refurbish the office to the network’s standard.
  4. Underestimating the commitment:
    Starting any business is a hard slog and takes a lot of commitment, time and energy. Winkworth will help any potential franchisee as much, or as little as they would like, to ensure all the tools are in place prior to opening the door for business to make life a little easier. A pre-launch and continuous marketing plan, as well as full online set up and the right staff will aid you and help with time-management.
  5. Inability to compete:
    The estate agency market is a saturated and competitive one, especially in the current climate. The New Franchising team will do their own specific research into the markets you want to infiltrate as well as asking any potential franchisee to do their own research too. There are some areas in the UK where either the transaction levels are not there due to age demographic of people or geographical issues. Another point to consider is how many agents are in your target area, how long they have been established for and the market share of each. If we come to a conclusion that the areas we are researching are just too difficult to make a successful business out of, we will look to other areas to suggest.

Opening a franchise is a big investment, but a very rewarding one. With the help and support of Winkworth’s Head office departements in Mayfair we can ensure your office has every chance of success.

Winkworth is looking for new franchisees to continue their successful growth.

Contact James Campbell (New Franchising Executive) via email at or telephone on 020 7355 0200 to find out more about starting your own Winkworth franchise. All conversations will be strictly private and confidential.

Learn more about franchising with articles, tips and advice on taking the next step in franchising:

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