Return to NASE.org

 Print Friendly         Email to Friend   


Franchise Versus Independent
Article 5: Cons Of Franchises

The downside to franchising includes its inherent limitations and the problem of less-than-ideal franchisors.

The inherent limitations are generally unavoidable since they are built in to the business model. These negatives can include:
  • You are your own boss in the sense that the only vacation and benefits you get, you must provide. In the eyes of many franchisors, your relationship is more likely to resemble that of a contract employee, who must follow instructions, but who receives little in the way of employee-type benefits.

  • You usually are not encouraged to innovate or deviate. That’s what makes the franchise consistent for customers regardless of location or owner. Some franchisors, however, encourage franchisees to make recommendations on improving operations, and some franchisors are less rigid, allowing departures from standard operating procedures.

  • Just because it’s a franchise doesn’t mean it’s a respected and trusted brand name. Indeed, most products and services offered through franchises are largely unknown or untried by the buying public. Not every franchise is Kentucky Fried Chicken.

The problems of less-than-ideal franchisors arise when a franchisor may not have your best interest at heart. These negatives can include:

  • The number one complaint among franchisees is the lack of support from their franchisor.

  • The lack of an independent franchisee advisory board is a red flag. Many franchise agreements provide for an advisory body to negotiate with the franchisor on behalf of franchisees. This representation can be a plus in getting contract concessions and insuring franchisors meet obligations.

  • A rubber stamp advisory board advancing only the franchisor’s wishes isn’t much better. Ask franchisees about their advisory board. Shy away from franchisors with the rubber stamp variety.

  • One franchise plus is that you are promised a “proven business system” to avoid trial and error mistakes. But promises are cheap. Not every franchisor is expert at site selection, design and construction, trademark protection, purchasing and cost controls and so forth. Sometimes companies sell franchises before mastering these tricks of the trade, simply to cash in.

  • A franchisor is supposed to provide support to your franchise, but you may find instead that you are held to strict adherence to the operating system, while the franchisor legally is less obligated in a fiduciary sense to you.


 

 Print Friendly         Email to Friend   

 
Franchise Versus Independent
Select an online seminar from the Success Skills Archives:


Complete List of Seminars


 Current Seminar

If you liked this topic, check out these related Success Skills Seminars:

 

© 2007 NASE All Rights Reserved.