Demerits / Disadvantages :
- Break even point achievement –
Net receipts from franchises could not be immediately received within a year or two so as in self entrepreneur subject. Only a few new franchises breakeven immediately made which had taken upto six months to a year.
- Lack of Innovation –
A franchisee lack innovative ideas since when franchise has taken. A franchisor needs to realize that they are now working with several independent business people who have their ideas & ways of doing things.
- Lack of Business Skill –
Business skills required to operate a franchise are at variance with those required for running a retail store.
- Others –
No manufacturing so no location, economies & location curve.
Risk of loosing worldwide reputation if no quality control.