Everyone enters into a franchise agreement pumped up with enthusiasm for the new initiative and determined to achieve personal and career goals.

For some franchisees though the dream doesn’t become reality and they find themselves staring failure in the face.

The failure of a business can be caused by the actions of the business owner, their staff or the franchisor; a collapsed business can also be the result of external factors such as a significant change in the market or tough economic conditions.

Here we look at some of the ways franchisees can help themselves avoid a business disappointment.

One of the common mistakes made by franchisees is to assume that the success of the business is down to the franchisor. It is not. When a franchisee signs their franchise agreement they are taking responsibility for the performance of that business. Of course there will be assistance and guidance from the franchisor but this is only plays a partial role in franchisees achieving success.

So let’s start with expectations. Really understanding what the franchisor expects, where responsibilities lie, and how the franchisor might be able to assist in times of difficulty will get the franchise relationship off to a good start.

Franchisees expect the franchisor to have a vision and a plan – the same is required of franchisees. A business plan is an essential – and it needs to be referred to and updated as the business grows. This will keep the franchisee focused on the business goals. It is easy for a busy franchisee to get caught up in the day-to-day operations and not have time to step back and review the progression of the business. Franchisees who can make time to look at the detail of the business’s performance – and to seek assistance from the business development manager or field manager – will reap the benefits.

When franchisees construct their investment budgets it can seem simple enough to cut some corners on the working capital. This can prove to be a costly exercise however.

In a previous interview, Tony Melhem, now the franchisor of Coco Cubano but a former franchisee himself, said “Undercapitalisation is a key factor in the downfall of any business. Beginning a business without sufficient capital to fund marketing, office space and any other costs associated with beginning a business is similar to building a house without a foundation.”

Kate Groom, a co-founder of SmartFranchise, says there are seven ways in which a franchisee can pull the rug from under their feet.

The most common failure is too little income.

Franchisees must watch for warning signs in their business, she suggests. “Where you are today is a result of the activity in the past, so plant the seeds for good growth in the quiet times.”

It’s important to stay on top of the business.

Franchisees benefit from the operational rules of the franchise system.  Compliance maintains standards for the brand and its service or products; it can also keep the business on track. Taking shortcuts may cut costs initially, but there may be a price to pay further on in the business if there is a negative impact on the product or service.

Good franchisors will benchmark their outlets’ performance and share the results of best practice. It pays to communicate with other franchisees in the network who can offer solutions to problems or suggest alternative ways to achieve results.

It is crucial for franchisees to ensure they are paying a reasonable price for their franchise, and any leasing of site or equipment. Prohibitive rents, the outlay of too much capital, paying over the odds for a business that won’t recoup the investment will all set the business on a difficult financial path that it may not be possible to divert from.

Seeking independent financial and legal advice from professionals with expertise in the franchising sector is a wise step before any franchise investment.