Franchise Disadvantages

Disadvantages Of Franchise.

In this world every things have some positive points and some negative points also. Similarly if franchises have some advantages and they have some disadvantages also. But most of the times these disadvantages are get covered by the advantages. The common disadvantages of a franchise are:

1. Franchises are always expensive. - Buying a franchise is not always easy and not every person can buy it. Franchises are always expensive and they are mostly out of the reach of common peoples. According to a survey done by the International Franchise Association (IFA), more than 20 percent of the franchises cost more than $260,000. And the requirement for the initial investment is more than $100,000. Certainly this amount is out of reach of common people. They cannot afford to mange this sum of amount. This is the biggest disadvantage of franchises but it gets covered by the fact that franchises gives huge profit also.
2. Block the independencies of the franchise’s owner. – If you are running a franchise then you will have to follow the owner manual and rules of the parent company. You are there just to run the outlet. Rest of all the things are decided by the parent company. You don’t have individual right to change or to do anything by yourself. Sometime the employees are also employed by the parent company. They decide which type of employees you are going to need.
3. It is just like marrying an unknown person. – You don’t know what the environment will be later. You cannot guess that the future environment will be good for you or not. You are living with an environment for a fixed interval of time. This means the average tenure period of franchise is 10.6 years, decided by the IFA.
4. Security may be exaggerated offered by the franchises. – According to a study it had been shown that during a four-year period franchises are almost like to go out of the business similar to independent small businesses which had been purchased by their respective owners.
5. Getting cheated by the parent company. – There are many parent companies which just take the franchise fee and do nothing. These parent companies are just for collecting money and they do not do their duty such as giving training, giving time to time assistance or advertising.
6. Paying huge charges for supplies. – Most of time you may see that the franchisers are overcharging for the supplies. They give you materials at inflated prices. And it is necessary for you to buy the particular materials because you cannot sell the product of any other brand. This may lead you to in huge loss.
7. Unnecessary charging as a fee. – The parent company charges unnecessarily on the name of training and advertising. They can also charge for the mandated but useless training. You are not going to get any help from that training even then you will have to pay huge sum for that.
8. Wrong sales presentations. - There are some franchisers who show you something else but give you something different. These types of things are done by frauds only.


Keeping all these things in mind you should be always careful at the time of buying any franchises.