1. Unrealistic return on investment

The chain franchisor has promoted it through the Internet and other forms of advertising, boasting that it only takes 3 months to join the project and at most half a year. All investments can be recovered; the headquarters will be fully responsible for employee training, early advertising investment and unified store image design. However, after joining the franchise, the franchisee discovered that the investment cost was far more than the originally stated amount, or that the cost of publicity was only a direct cost and did not include indirect costs such as management fees. The franchisor's prior commitments could not be truly fulfilled. It is also unable to make a profit, and may even never see any hope of making a profit and declare bankruptcy.

Many franchise projects often take a long time to recoup their investment. If the franchisor claims a rate of return that is much higher than the average level in the same industry, it is actually questionable. How could he be willing to transfer such a good project to you on such favorable terms? 2. The essence of "franchising" is to sell "equipment and raw materials"

Many franchise projects are said to be "franchising" on the surface, but in fact "franchising" is just a beautiful cover. The purpose is to sell machinery, equipment and raw materials at high prices. This is a common phenomenon at franchising exhibitions. After you buy its equipment and raw materials at a high price, the franchisor will run away, and in the end only the franchisee will consider himself unlucky.

If an entrepreneur is investigating a franchise project and finds that the same type of machinery and equipment can be purchased at a lower price in the market, and the cost of purchasing machinery and equipment accounts for most of the franchise amount. Or even all of them, you have to be careful about being deceived. 3. "Flagship store franchise" is actually a "trust"

Some illegal franchisors colluded internally and externally through the packaging and promotion of several franchise stores and model stores in the early stage, allowing investigators to see that on the surface Business is booming, but in fact most of the customers and people who praise the franchise are "trustees" invited by the franchisees. Once you actually join, the franchisor will only care about collecting franchise fees and management fees, and will not care whether you make money or not.

Therefore, I suggest that entrepreneurs should take a closer look at the actual operating conditions of other stores under the same brand that have already joined before making a final decision to join. In addition to visiting the main store, you also need to randomly select a few franchise stores to understand the situation, and at the same time hire experts to help you through a few days of on-site observation to understand the daily customer flow of the franchise stores? What is the approximate turnover? Is it really possible to make money? There is a saying that goes like this: "The sharpening of the sword will make it easier to chop the firewood." Don't be reluctant to spend a little more money to do a thorough preliminary market survey just because you want to save money. 4. Format contract trap

Some franchise stores promise to the franchisee when signing the contract that they can purchase all the franchisee's products, but at the same time use the format contract to indicate that they must meet the agreed product quality standards. When the franchisee produces a product, the franchisor often refuses to purchase it on the grounds that the product does not meet quality standards, and the franchisee can only "eat the coptis in silence". The franchisee did not have any experience when signing the contract and was unable to know whether the agreed quality standards could be met, and it is possible that the quality standards set by the licensor were beyond the reach of even gods.

When entrepreneurs choose to join a chain project, the contract is the last barrier to protect their rights and interests. They cannot sign the contract casually. They must spend the necessary time to carefully consider all the terms related to their own vital interests. If you feel that your abilities are limited, it is best to ask for help from relevant professionals you trust.

For entrepreneurs who are new to the business world, in addition to paying attention to the above traps, it is also crucial to select franchise projects, including the development prospects of the industry, the franchise store's status and market share in the same industry rate, whether you have certain advantages in doing a good job in the franchise store, the social visibility and reputation of the franchise store brand, and the profit prospects of the franchise project, etc.