The Top 10 Franchisee Challenges (and How to Overcome Them)
Jun 03, 2025
What are the challenges that franchisees are experiencing today? I set myself to the task and asked some of the franchisees who have engaged with our academy to share with us what they're confronting today and the struggles we're currently helping them address and overcome.
This is not just a random collection of franchise owner problems searched on the internet. These are the difficulties that keep them awake at night, from the franchisee’s perspective.
But I’m writing this post to expose them. Perhaps you are also facing one, two, or many of these franchisee challenges, and I want to help you by providing some tips on how to tackle them, so you can enjoy your franchise journey and improve your results.
Let’s go over the top franchise challenges, in order of importance. Compare this list to the struggles you are facing and how they rank in your world.
Don’t miss our future content! Subscribe to our YouTube channel, listen to our Podcast, and follow us on all social media platforms.
10. Accountability
Franchise owners are struggling to document and follow up on the execution of the business expectations. That is because they lack a specific process or procedure to hold their team members accountable.
Accountability is critical. You may have all the guidance, training, delegation, and empowerment in place, but if you don’t have a process to hold your people accountable for implementing those systems effectively, the execution won’t be as consistent as you want it to be.
Franchisee Tip: Establish a clear disciplinary process that your leaders can follow when a team member fails to perform as expected or does something wrong.
But that’s not enough. You must document this process and train your leaders on how to execute it, because the reality is that people avoid having these difficult conversations. But if you make it as simple as possible, they will know how to address the situation effectively and without hesitation.
And remember, this process should ideally refer to your mission, vision, and values. Taking this as an opportunity directly related to your charter makes the conversation about accountability much simpler.
Must watch: How to Achieve Consistent Execution in Your Franchise
9. Culture and Team Alignment
The next franchise owner problem challenge is about creating the kind of culture they want in their organization. This involves understanding what to communicate and how to do so, building and fostering a culture of positive, productive, and healthy competition, and knowing how to create the organization and working experience that employees desire.
Franchisee Tip: Creating your charter (the mission, vision, and values) is paramount for you to be able to develop a good culture. That way, people will understand:
- What they are supposed to accomplish every day, beyond just selling the franchise’s product or service.
- The long-term vision of the organization.
- The values and the principles used to make decisions.
When you have clarity on these elements, you can start to talk about your mission, vision, and values in every conversation, and actually live and interact according to these principles. That way, you can start building a culture that aligns with the kind of experience you want in your organization.
Keep learning: "The Challenge Culture" from the Former Dunkin Chairman
8. Growth and Expansion
Franchisees say that although they really want to expand and become a Multi-Unit Franchisee, they find it extremely challenging because scaling requires substantial effort and work. I have news for you: it does!
Addressing this franchisee challenge involves creating the necessary business systems and processes that enable you to delegate operations and management to your leaders.
Franchisee Tip: To expand and grow successfully, you must create and document those systems and train your leaders on them so that they can take over some of your responsibilities with confidence, ensuring consistency of execution within your organization.
7. Inventory Management
Challenge number seven is that franchisees don’t have a way to track the inventory of their products. Although 60% of our clients are in the food service industry and 40% are in retail and personal services, inventory tracking seems to be a common issue across the board.
Franchisee Tip: Use a platform or software program to support you in this franchisee struggle. Nowadays, technology is an indispensable tool that can help you manage various business processes with ease and success, including inventory tracking and management.
One of the key principles we teach our franchisee clients is that to achieve consistent execution, the number one rule is ‘to keep it simple’. And technology facilitates that simplicity.
So, if you're having issues with inventory tracking and product management, consider investing in a tool that can simplify these tasks. Then, train your team on how to use it and delegate the responsibility.
6. Marketing and Sales Growth
Franchisees are struggling to develop a process that effectively promotes their businesses to increase sales within their organizations. However, they often forget that the franchisor has resources available to help them achieve success.
Franchisee Tip: If you need more sales but you don't have a process in place, I suggest reaching out to your franchisor to learn the tools, resources, and guidance they offer for executing local store marketing.
You need to own your sales. The franchisor is not going to come to your community and knock on your neighbor's doors to ask them to buy your product or service. That's gonna be up to you, or your team members and leaders in the units that you own.
5. Financial Management and Profitability
The next problem has to do with financial management and profitability, saying that they don't know how to control their costs, whether it's labor costs, cost of goods, or other business expenses.
They also lack the knowledge and financial clarity needed to read or interpret a profit & loss statement (P&L). Besides, they can’t tell which numbers are the most important for their organization or what activities they can execute to improve those numbers and KPIs.
The fact that franchisees have such a big problem with this is really troublesome to me because, as a business owner, financial acumen is one of the basic skills that you need to have or acquire. However, this ranking suggests that many franchisees are struggling with their financials.
Another proof of this is that none of our clients had a financial plan until they joined our programs and learned how to create one. Interested? Learn more about our COMMAND Program!
Franchisee Tip: Understanding your financial management, P&Ls, and how to manage your business effectively is crucial to achieving profitability.
If you don’t understand your financials, reach out to your franchise accountant. Sit down with them and go line by line until you are clear on what your business numbers are saying, so you know what to do to achieve your business goals.
4. Time Management and Burnout
Some franchisees confessed that they are struggling with time management and experiencing administrative overload, no time to plan, and excessive working hours. As a consequence, they are feeling burned out.
Being a business owner is more than most people expect, with numerous tasks to manage and care for. There’s also the misconception that buying a franchise will automatically bring time and financial freedom. However, that’s not the case. At least not until you put the systems in place and grow enough to have a leadership team to delegate operations to.
That is the reality of the franchise industry. Having one unit is just like having a job. And if you're not involved in the day-to-day operations of that unit, you leave a lot of money on the table, making it a struggle to achieve profitability and success.
Franchisee Tip: When can you start to let go? I would say that you need to be very involved until you are big enough to hire a District Manager to oversee the operations. In the meantime, you will be very busy.
So, start defining those systems, processes, and procedures, document them, and train your people as quickly as possible with consistency, so that when your organization grows, you can delegate and achieve the freedom and work-life balance you want and deserve.
In case you missed it: Traction vs Distraction. Productivity Hacks for Busy Franchisees
3. Leadership Development
The third highest challenge that franchisees shared with us is not just about developing leaders within the organization, but even developing themselves to become the type of leader that their employees are looking for.
Franchisees come from diverse backgrounds, including government or corporate employees, insurance or real estate agents, among others. And they may not know how to lead or inspire their employees, despite the many tools, programs, and books on how to become a great leader.
Franchisee Tip: Identify the characteristics, actions, and behaviors that your team members expect from a leader, and measure yourself against that list. Evaluate your leadership team as well. This way, you will be able to identify areas of opportunity that you and your managers should begin to develop or strengthen.
Remember: keep it simple. Books or webinars can be a good starting point, which could later lead to investing in a more robust and comprehensive training, such as the programs we offer at American Franchise Academy.
Either way, you must develop these leadership skills in both yourself and your team, especially if you plan to grow and succeed as a franchisee.
Don’t miss: The DNA of Success. 3 Qualities of Top-Performing Franchisees
2. Systems and Execution
It’s no surprise that this is the second biggest challenge because, as I have explained throughout this blog post, the answer to most franchisee struggles is creating a system, process, procedure, or policy behind it, and training your people on it. That way, franchisees will be able to address that problem and achieve consistency in business operations.
Despite this necessity, many franchisees are unaware of how to create such systems, and as a result, they get stuck in their enterprise.
Franchisee Tip: Creating standard operating procedures for your business is up to you. The franchisor won’t provide you with those.
That’s why you need to understand how to create and document those systems, and then train your team members on them so you can delegate and they can then execute them with a high level of excellence.
1. Staffing and People Management
The number one and biggest challenge for franchisees is staffing issues. Why? Because this struggle involves many crucial processes around people, such as:
- How to recruit and find the right people for your business
- How to conduct an effective interview
- How to hire and set the tone for the job and the employer-employee relationship
- How to do the onboarding process to get people excited
- How to train the employees properly
- How to motivate your team and discipline them whenever it’s needed
Franchisee Tip: If this is not your number one issue, it is likely among your top three. Either way, you can overcome this challenge and turn your people into your greatest asset.
You can do that with our COMMAND Program. This program is designed for Multi-Unit Franchisees, providing support on their journey to establish systems, processes, and procedures that overcome not only this challenge but also all of the franchisee struggles mentioned above.
Most of the time, the problems or issues that we have are an indication of a system, process, procedure, or policy that's missing in our organization. If you want to learn faster, implement better practices, grow, and achieve time and financial freedom, this might be the program for you. You’ve got nothing to lose and everything to gain!
Reflections:
- How many of these challenges are you currently facing?
- How are these issues affecting your business performance and your personal life?
- What are you doing to solve those problems?
- Do you have strong business acumen and the necessary leadership skills to drive your franchise to success?
WATCH THIS PODCAST ON VIDEO:
