5 Disadvantages of Franchise

Now that we have accustomed ourselves with the advantages of franchise, what about the disadvantages and the short comings?

Here are 5 of them:

1. Too expensive

No doubt, a franchise right is expensive to acquire. The more established the franchise is, usually the more the price will be. You’re not just buying a supply here but you’re buying into the whole system, including the supply chain, trademark right, training, equipment and many others.

In many occasions, the cost associated with buying and setting up a franchise operation will make us shy away from the business.

2. You are not really the boss

If you resign from your nine to five job because you no longer intend to receive instruction from others, going into a franchise business can somehow defeat the whole purpose. Running a franchise requires you to abide to the obligations and restrictions by the franchisor religiously, failing which you may find yourself dragged into the courtroom. Then the drama begins. Not only you receive their instruction, you also ‘pay’ them in the form of royalty fees every year without fail.

3. The system is there, you only run it

Like explain above, buying a franchise right is buying a system. It’s already there. The franchisor just need people who can run the show for them. In a way, your creativity may not get attention it deserves. You may have breakthrough ideas that can totally change the business, such as replacing the deep fryer that cook the KFC chickens with a grill machine designed by a NASA scientist, but no, without approval, you ideas won’t fly.

4. Limited growth potential

For some reason, you will be at a point where you find it extremely difficult to grow and expand your franchise business further. For example, it is likely that your attempt to open up another branch in the next city will be met with territorial restriction by your own master franchisee as there is already an outlet operating there. In other words, you’re reaching a plateau of growth, and for a businessman, plateau is not a good thing.

5. You can’t franchise a franchise

Franchising a business denotes a sign of accomplishment. It means you have steered the business for many successful years because the franchising requirement will not allow you to franchise a crap business. But what can you do after running 5 years of successful McDonald’s franchise? You can’t franchise a franchise, and there’s no such thing as mini-franchising a franchise. As far as the branding goes, your franchisor is the winner and you can only be proud as a successful ‘franchise operator’.