Franchising (Part IV)

Potential Disadvantages for the Franchisor:

Less control over day-to-day operations
Reputation may be damaged by some franchisees
Franchisee motivation may wane over time
Some Franchisees take short-term view
A franchisee may become too powerful
Restricts use of other channels if exclusive geographical area agreed

Potential Disadvantages for the Franchisee:

Turnover and income may not meet expectations
May start to resent restrictions
Less scope for initiative and localisation
Cheaper supplies may be available from other sources
Still paying fees for marketing, even when a loyal customer base is established
As turnover increases, so typically does the fee