What Are The Demerits / Disadvantages of Franchising?


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Franchising 1

 

 

 

Demerits / Disadvantages :

 

  1. 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.

 

  1. 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.

 

  1. Lack of Business Skill –

                            Business skills required to operate a franchise are at variance with those required for running a retail store.

 

  1. Others –

No manufacturing so no location, economies & location curve.

Risk of loosing worldwide reputation if no quality control.

 

 


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