Disadvantages of Buying a Franchise

Are You Thinking of Buying a Franchise?

FranchiseThere are a number of advantages of buying a franchise, but there are also disadvantages.  To make a wise decision you should have a good understanding of the benefits and the draw backs of owning a franchise in your field of work.  You should be able to weigh the pros and cons objectively and come to a good conclusion as to where the best course for your business lies.  In this article you will learn about the downsides to owning a franchise.  A franchise enables you to sell products and services that have a brand that is recognized, either on a large scale, or a small one, depending on the kind of franchise you purchase.  When you buy a franchise, you effectively rent the right to operate under the name and brand of the chosen business for a period of time.  However, this right does not come without restrictions.

Restrictions that come with ownership of a franchise

The franchisor may levy a number of restrictions on your business to make sure your franchise outlet conforms to the standards of the others in the country.  These restrictions in a way help to keep your franchise uniform.  However, they can be a burden and take away your right as a business owner to exercise your decision making authority.  The Franchisor may place restrictions on the goods and services you sell.  If you own a restaurant, your menu may be limited to the uniform menu of the franchise.  The Franchisor may tell you where to buy your stock.  For example, if you own a car maintenance outlet, you might only be able to purchase your spare parts from a list of pre-approved companies, even if you know of another cheaper option.

Diminished sense of ownership

When you start a small business, part of your responsibility is to make decisions that impact the direction you feel the company should go.  That decision making authority is highly diminished when you choose to buy a franchise.  When buying a franchise, the Franchisor may provide you with staff and management that operate according to the modus operandi of the Franchisor.  Your ability to decide the location of the outlet, what goods you sell, who your market to, and how you manage your own business may be taken away from you.  If you break the rules of the contract, you will lose your investment.  If you are the kind of business owner who likes to be the boss, take risks, and make decisions, you may not find owning a franchise to your liking.

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