Pros And Cons Of Franchising (Part 2)

Cons

Start-up expenditures for franchises can be rather substantial

Starting a franchise may have higher start-up expenditures than starting a small business on your own. If you want to start a small business without taking out a large loan or risking a lot of your own money, being a franchisee might not be the ideal choice. It’s a good idea to make a cost comparison before committing to one type of business over the other.

With a franchise, you have fewer flexibility

When you become a franchisee, you must follow the franchisor’s policies and adhere to the conditions of your licensing agreement. You can’t change items like the products you sell, the store’s decor, or the staff’s clothes. You have less room for innovation and personalization when you own a franchise.

Fees for franchises can quickly mount up

Franchisees do not allow you to use their logo without permission. Fees will be due to the company from which you purchased the franchise. According to your licensing agreement, a portion of each month’s income will leave your coffers and go to the franchisor. These expenses can mount up quickly, which is why it’s a good idea to hire a lawyer to assist you in getting a fair deal on your franchise. If you don’t want to pay a franchise fee, you may want to avoid it completely.

Your company’s fate isn’t totally in your hands

Franchisees benefit from the company whose franchise they purchase brand recognition, but they are equally vulnerable if the public turns against that brand. Health issues at another franchise location, corporate scandals, and other factors might make franchisees vulnerable and jeopardize their revenues.

Also Read: Pros And Cons Of Franchising (Part 1)