When a franchise network faces widespread store closures, it’s easy to question the model itself. However, the real issue often lies in the franchisor’s strategy.
Rapid expansion without proper market analysis, inadequate site selection, and failure to support franchisees can all lead to underperformance.
Over-saturating a market leads to cannibalisation, where new locations undermine the sales of existing stores rather than driving overall growth. Without a clear understanding of demand and sustainability, large-scale closures become inevitable.
Closing stores should always be the last resort. It undermines brand trust, affects franchisee confidence, and can create instability across the network. Franchisees invest in a brand expecting long-term sustainability, and they rely on the franchisor to implement strategies that foster success which they can replicate.
Large-scale closures often point to miscalculations in franchisor growth strategies, rather than flaws in the franchise model itself.
Franchisor mistakes
Rapid expansion
One of the biggest mistakes franchisors make is prioritising rapid expansion over sustainable growth. The lure of opening multiple locations within a short timeframe can be tempting, but without careful planning, a network can collapse under its own weight.
A successful franchise system is not built on the number of locations alone, but rather on the profitability and stability of each individual unit.
Poor franchisee selection
Another frequent issue we’ve seen throughout the industry is inadequate franchisee selection. A strong brand and proven operational system alone do not automatically guarantee success.
Franchisors must have a rigorous recruitment process to ensure potential franchisees are not only financially capable but also aligned with the brand’s vision and values. Too often, franchise networks suffer because they fail to properly assess whether a candidate is suited to running a particular business.
Failure to deliver support
Additionally, some franchisors underestimate the importance of ongoing support and training.
Franchisees are not just business owners; they are partners in the network’s success. Without consistent training, operational guidance, and marketing support from above, franchisees can struggle to maintain profitability, which can lead to dissatisfaction and, ultimately, store closures.
Unrealistic growth targets
The most successful franchise networks prioritise quality over quantity. This means setting realistic growth targets and ensuring that each new location is strategically placed and well-supported. A strong foundation, including thorough market research and financial modelling, is critical before expanding into new territories.
Uncollaborative culture
Equally important is fostering a culture of transparency and collaboration between franchisors and franchisees. Open communication, regular check-ins, and constructive feedback loops help franchisees feel supported and engaged. This also allows franchisors to identify potential issues early and step in to provide additional direction before they escalate into major problems.
Sustainable profitability key to success
Sustainable franchising isn’t about how quickly a network can expand but how well it can support its franchisees and ensure long-term profitability. A strategic, measured approach to growth, backed by solid due diligence and ongoing support, is what separates thriving franchise systems from those that struggle. Without these fundamentals, even the most well-known brands can face setbacks.
With the right measures in place, franchising remains one of the most effective ways to scale a business while maintaining consistency and brand integrity. Entrepreneurs considering this path should focus on strategic growth, comprehensive support systems, and financial sustainability to ensure long-term success.
