What are the disadvantages that someone will probably face when taking a franchise?
The following are the disadvantages of taking a franchise, since it is so
the differences arise between the franchisor and the franchisee with respect to specific formal and informal commitments that are not implemented. Few of these are
– Correct and the only way to do things: the freedom of the franchise is limited. The franchisor tries to exert exaggerated levels of control. It is likely that the owner of the franchise feels that their freedom is lost, their freedom to innovate is reduced.
– Continuous cost implication: in addition to the rate and royalties paid, the franchise must continually share the revenues with the franchisor. In addition to this, the franchisor charges for services such as advertising and training. The more reputed the franchisor is, the more these costs are.
– Risk that the franchisor will be bought: the franchisee suffers problems, losses and difficulties when the franchisor fails or if the franchisor is bought by another business.
– Inability to provide services: when the franchisor can not provide the advertised services, the franchisee will enter a situation of risk since it does not have the support required to manage the business.
Additional content on this subject can be found at
Video credits to Eduxir YouTube channel