Disadvantages of Franchising
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Franchising is not always the best option for an entrepreneur. Anyone investing in a franchise should investigate the opportunity thoroughly. Problems between the franchisor and the franchisee are common and have recently begun to receive more attention from the government and trade associations.
The disadvantages to the franchisee usually center on the inability of the franchisor to provide services, advertising and location. When promises made in the franchise agreement are not kept, the franchisee may be left without any support in important areas.
The franchisee may also face the problem of a franchisor’s failing or being bought out by another company. The failure of these Franchisees has made it difficult for some companies to continue because customers are apprehensive about doing business with him for fear that he will go out of business.
The franchisor also incurs certain risks and disadvantages in choosing this expansion alternative. In some cases the franchisor may find it very difficult to find quality franchisees. As the number of Franchisees increase, the ability to maintain tight controls becomes more difficult.
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Comments
@H P Royh...thanks for the comment
As an entrepreneur myself, I am not a big fan of franchises. However, I do know of a lot of people who swear by them. Largely because the one thing a franchisor does supply is a formula that drastically increases the franchisee's odds of success if they follow that formula diligently.
Thanks for posting! I look forward to reading more of your posts!
Good Hub, You are so correct!! I used to own a Baskin Robbins Franchise in WV. It turned out to be nothing more than buying a minimum wage job.
Wow!I always thought franchise is a good way to start your own business if you have the money. In fact, I knew a few who made it and retired at their early 40's. I guess nowadays things are different. It all depends on the supply and demand. Thanks for the great hub and your generous compliments about me:)
Another great hub!
Wow, I never knew there were so many franchises until I read one of the ads.
You are corect.In my small City of Sparta,anyones who tried to have a Frinchise of something went straight to the bottom financially.
Mc Donalds in the early days made a lot of people rich. You need to investigate the franchise and see what the marketing value is before you buy. Name recognition is very important if you plan to succeed. I like your articles, Are you currently now in Africa? It is the land of golden opportunity. Coffee is one hot seller here in the US.
This is a great Hub! I think Franchises are a great way to start a business, provided due diligence is done and research is done to make sure it is viable. I have a cool job, but I would not hesitate to start my own business in a heartbeat, and chances are - it would be a Franchise. Why start from scratch, when someone else has done all the prep work for you, and proved it works. Look at food Franchises in The Philippines! Need I say more?
Thank You. Great hub. God Bless
Thank you for introducing me to your informative hubs and becoming my fan. When I migrated to Australia and was without work and money for a while I nearly bought a bakery - the famous franchise business, fortunatelly in the last moment I got a job in my profession and I was able to pull it off.
Thank you for great information.
Good points. I write quite a bit of business and finance, and I'm glad to see someone spelling out the problems effectively, and not working on the starry-eyed approach.
I did not know this before, thanks for the info!
Thanks for your comment everybody...I hope it will be useful
Thanks for the Hub! It makes sense after reading this, that it won't always work and that what hopes we have for a franchise have to also be realistic.
Very informative! Nicely put.
Interesting information. I think there are many people who want to make money quickly and believe the franchise is the way to go. If you don't do the research and investigate the market thoroughly, then with any dealing you can go bottom up. There is no quick way to the top. It takes hard work and smart thinking. Nice article.
Great Hub !
Wow - I didn't know the simplicity of either you are up or you are down. Thanks for the info.
As a Business that sells franchising oppertunities, I must add that a purchacher of a Franchise must asure that they are not getting into a pyrimid scheme, ie, Am way.. now puts you into your own "business" with whatever you want to call it, However, they still have rigid recruting requriements. They way they are Global, only exsist because of our Fantastic Military Members,with their travels and recruts. please dont get sucked into this type of Franchise. another factor is to asure you own the rights to the County you live. you get first dibs on if you want to expand your franchise. We never double up on a County. one per only. unless our franchisee, gets so busy {in high crime area's this has happened} the original owner called us to expand. WE have No requirments to recurt. and you own the rights to the County you purchase from us. WE are Alpha 1 Biohazard removal and crime scene cleanup services.LLC
just a note to those in the market. if its to god to be true it is almost always TooGood to be true.
thanks,
gigi
@gigietic................I agree with you
@gigetic I'm not sure I would classify Am Way as a franchise but I have come to the conclusion that many multilevel marketing systems are legitimate ways to earn money. However, to be successful with a multi level marketing program, like Am Way, requires a certain skill set that is more suited to people who like to be salesmen rather than to those who want to be a business manager.
@kazeemjames01 Thanks for providing quality insights to the public! We share a common goal there.
kazeemjames01 - My franchisor (and I'm assuming all franchisors) used a sliding scale of fees where the larger, established franchisees paid little or no fees and the newest smallest paid a much larger percentage. Ouch!
Food franchises seemed to do well but I'd recommend to go independent in most other sectors.
Great information for the prospective franchisee.
H P Roychoudhury says:
6 weeks ago
hi,
good information. Thanks.