Six Disadvantages of Going Into Business on Your Own Via a Franchise
(1) Although it is your own business you will always be expected to act in the best interests of other individual franchisees and of the franchisor. You could find this annoying and restrictive.(2) In addition to your initial franchise fee, a portion of your on-going profits will need to be given to the franchisor every year. This can get annoying.
(3) This continuing fee to the franchisor is often based on sales, not profits. That can lead to a few problems if you are struggling to make a lot of profit, perhaps because your overheads have gotten too high. This problem with overheads will not be reflected in your on-going fees.
(4) Your franchisor will have the right to demand that you send him/her sales statistics and other related documents promptly as well as the right to turn up at your business premises to inspect your records. This can seem intrusive.
(5) You will always be required to stick to the methods that have been set out in the franchisor’s operating manual. This might be restrictive and will allow little room for you to exercise your own methods, initiative and enterprise.
(6) You may well be required to purchase all of your stock from the franchisor. This will allow you very little room to seek any kind of competitive alternative. Once again you may find this overly restrictive and stifling.
James is a financial journalist and writer. He writes about everything from mortgages to credit cards to loans. He also writes a blog for Coupon Croc .
