Franchising Done Right: Why Most New Franchisors Fail and How to Avoid It

You have a great concept. You have opened three or four brick-and-mortar locations, and the numbers look good. You have even taken the next big step: you got an FDD (Franchise Disclosure Document).

Now, you are ready to scale. After all, if the business works for you, wouldn’t it work for others?

What could go wrong?

The Harsh Reality: Franchising is a Different Business

Many founders assume that franchising is simply an extension of their current business. In reality, it is an entirely different business model with its own complexities, pitfalls, and skill requirements.

Here is what I have seen most new franchisors fail to realize:

• Franchising Expertise – Running a franchise system is not the same as running corporate-owned locations. It requires governance, legal compliance, and a deep understanding of unit-level economics.
• Operations & Support – Franchisees are not employees. They need structured training, ongoing operational support, and clear guidelines for success. A well-designed multi-location operations platform, training manuals, and field support team are crucial, but few founders have experience building them.
• Site Selection & Unit Development – Finding the right location, negotiating leases, and supporting franchisees through build-out and opening is an entirely different skill set. Without a structured real estate strategy, franchisees can end up in locations doomed to fail.
• Franchise Sales & Recruitment – The ability to attract qualified franchisees, vet them properly, and guide them through the decision process is both an art and a science. Too many founders assume franchisees will just come or rely on ineffective lead generation strategies.

The Silent Failure Rate: What the Numbers Reveal

Here is the hard truth: franchising does not just fail, it fails fast.

The number of active franchisors with FDDs has remained steady at around 3,500 for the past 25 years.

Yet, each year, approximately 400 new franchisors enter the market, all convinced they have a scalable model.

So, if franchising is such a "proven" model, why is the total number of franchisors not growing?

Because for every 400 new franchisors that enter the market each year, a similar number quietly exit, many within their first five years.

They fail because they lack:

• A well-built franchise operations infrastructure
• A clear financial model that works for franchisees
• A structured, strategic franchise recruitment plan
• The right people in key leadership roles

I have seen too many start-up franchisors operate under the false assumption that their concept alone will carry them through. But franchising is not just about having a good concept, it is about having a sustainable system.

The True Cost of Learning as You Go

The “learn-as-you-go” approach in franchising is extraordinarily expensive, and not just financially.

Here is what it could cost to bring in experienced leadership:

• A seasoned and provably qualified Chief Development Officer (CDO) or VP of Franchise Sales: $150K - $250K+ per year
• An experienced Chief Operating Officer (COO) to build systems and support franchisees: $175K - $300K+ per year

These are the people who ensure that the brand does not just grow, it grows successfully.

But most start-up franchisors hesitate to make these investments, believing they can figure it out themselves. That gamble often costs them their entire franchise system.

The Bottom Line: Franchising is a Business, Not a Side Project

Franchising is not just a growth strategy, it is a completely different industry. It requires a new mindset, team, and operational framework to succeed.

Before you take the leap, ask yourself:

• Are you truly ready to operate a franchise system, not just your business?
• Do you have the right infrastructure in place to support franchisees?
• Are you willing to invest in expertise instead of paying the price for mistakes?

Because the reality is this: franchising does not make a business easier, it makes it more complex.

And if you think learning as you go is an option, the numbers suggest otherwise

About Franchise Info Advisory Partners

As a franchise growth strategist, I have seen firsthand what separates successful franchisors from those who never make it past their first few years. Alongside Ned Lyerly and Michael (Mike) Webster PhD, we bring decades of real-world franchisor leadership to the table. With deep experience in building, scaling, and optimizing franchise systems, we specialize in franchise recruitment, operations, and sales strategy.

One of the most critical steps new franchisors often skip is franchise concept Market Readiness, ensuring that the business is truly prepared to scale. Rushing into franchising without this foundation is one of the leading causes of failure. Ned, Mike, and I excel at getting Market Readiness done right, aligning your concept, financial model, and infrastructure to support sustainable growth.

Take Action Today

Avoid the costly mistakes of trial-and-error franchising. Get the right strategy, tools, and systems in place from the start.

Email [email protected] or connect with and DM me on LinkedIn to schedule a free consultation.

Let’s build a smarter, stronger franchise system, one designed for sustainable, profitable growth.

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Editor Franchise-Info Joe Caruso [email protected]

Original Article - Franchising Done Right: Why Most New Franchisors Fail and How to Avoid It