Disadvantages of Franchising

As with most business models, there are some disadvantages to franchising which must also be considered:

  • The business will rely on the right systems being put in place to protect the brand, the franchisor and the rest of the network.
  • Significant investment from the franchisor is still required to ensure that the right advice is taken, the correct documentation is produced to protect both the franchisor and franchisee.
  • Apart from the ongoing management fee, the franchisees will take the rest of the revenues earned from their efforts.
  • Franchising a bad or badly functioning business will not improve its prospects. Furthermore a franchisee who attracts negative publicity or a poor reputation will reflect badly on the whole franchise business.
  • Franchising an idea is not permitted - you have need to have a successful operation in place first.