Franchise-Guide

Why should you become a franchisee?

What disadvantages do franchisees have from franchising?


Franchisees also face problems, which can be put down to the characteristics of franchising. The following should especially be mentioned:

  1. Requirements
    Social abilities are regularly expected of franchisees and to an extent, which they have not met with before. Not only must they develop into crafty and determined businessmen, but they must also motivate their employees with a high degree of sensitivity, communicate openly and constructively with head office and become a member of a team of more or less competitive partners. In practice these contrary requirements prove to be the squaring of the circle and result in feelings of frustration and irritation.

  2. Assessment
    It is extremely difficult to correctly assess the performance of franchisors. There is a lack of transparency due to the secrecy agreements and it is rarely possible to really compare offers. It is equally difficult for franchisees to assess how reasonable the required services in return are. This is especially true as it is not possible to predict with certainty to what extent franchisors will fulfil their side of the contract. When carrying out their enquiries franchisees are dependent on statements from third parties which refer to past data. Whatever the circumstances it is advisable to first contact several franchisees from the system to question them on their experience before deciding for one specific system.

  3. Commitments
    Having concluded a franchise contract franchisees are faced with a variety of commitments. Above all they must accept the rights of the franchisors to supervise and check on them, which serve to ensure that the franchise concept is realised. At the same time the franchisees are forced to restrain their own creativity so as not to go beyond the franchise concept.

  4. Dependence
    Although franchisees are regarded as independent business people, they are to a great extent dependent on the business policies and decisions of the franchisors. The performance of franchisors does not always fulfil the franchisees’ expectations, which can have a considerable effect on the success of the business. It may also be the case that franchisees must under certain conditions take responsibility for mistakes made by franchisors and/or other franchisees. As the fate of one partner is often dependent on that of the other the partners must carry the consequences of any loss of image to the system.

  5. Limitations
    It is generally the case that when a franchise contract is terminated the franchisees are not free to decide what is to happen to the business. Out of a necessity to protect themselves - and this is perfectly understandable - franchisors reserve the right to reject prospective buyers or heirs to the business as successors or grant themselves option of purchase.

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