The Cons of Franchising

When an entrepreneur decides to enter into a franchising agreement rather than starting an independent business from scratch, he or she becomes privy to a wide range of benefits that give him or her a decisive leg up in the marketplace. This is especially true during the start-up phase and during those rocky first 5 years in which a business is most likely to fail.

However, there are certain liberties and advantages that the franchisee gives up. These aspects may seem unimportant at the onset of establishing the business, but over time the entrepreneur may grow to regret the decision to tether him or herself to a larger corporation. Therefore, it is very important that anyone considering going into business understand what the long-term costs of franchising are.

Monetary Costs

From the very start, opening a franchise can be significantly more costly than starting up an independent business. This greater cost can stem from more than just the added cost of paying a franchising fee, which can be substantial. A franchisee does not have the option of starting his or her operation small and building up, but rather has to conform to brand standards right from the start, regardless of the cost.

The initial costs may seem well worth it for the benefit of greater security. However, over the long run many franchisees begin to bemoan the regular royalty fees that cut into their profits every month. This is especially true as the business becomes better established in and of itself and the franchisor's role become perceptibly less crucial.

Accountability

Many franchisees also come to resent the lack of autonomy they have as a franchisee. Many go into business with the desire to be their own boss, only to realize that they are, in all ways, still accountable to a higher authority. The owner often ends up feeling more like a glorified manager than an owner.

Lack of Autonomy

The sense of not being the boss of your own business is heightened by the fact that the franchisee is privy to very little autonomy in the running of his or her business. Everything must conform to brand standards, brand policies and brand operational guidelines. It is in the franchisor's best interest that all franchises present a consistent and uniform front. This leaves the individual owners with very little say in how things are done.

Community Support
Many franchisees find that it is very difficult to gain genuine community support. They may even find that some within the community are hostile toward the franchise, viewing it as an outside entity that is stealing away clientele from local independent business. For many who hold such opinions it doesn't matter if the owner of the franchise has lived and worked in the community for all of his or her life.
The negative side of franchise ownership isn't always readily evident. The lack of autonomy may seem unimportant at the onset and the ongoing royalties may seem well worth it to have a strong business right from the start with lots of corporate support. However, over time as the owner begins to feel more confident in his or her ability to run a successful business without a corporation holding his or her hand, those benefits may no longer outweigh what has been given up.