What Are the Disadvantages of Franchising?
Of course, the many advantages of franchising your business also come with several obligations and shortcomings. These can include:
Capital Investment – Establishing a franchise requires investment of time and money in business development, a flagship store, legal document preparation, marketing and packaging plans, and recruiting franchisees.
Less Control – The franchisees will agree to follow your training and instructions, but you may not be able to make changes without running into disagreements. Your franchisees are still independent businesses and negotiations may be necessary.
Costly Legal Action – In the event that a franchisee refuses to cooperate or proves unprofitable, legal action may be required, which can be both costly and damaging to your reputation among other franchisees.
Regulation – Franchises are regulated by state and federal laws, requiring the development of a Franchise Disclosure Document (FDD) and other Regulatory Documents with the help of an attorney.
Understanding some of the advantages and disadvantages of becoming a franchisor is a great starting point. For further information or guidance regarding franchising, please do not hesitate to contact The Internicola Law Firm, P.C. by calling (800) 976-4904 or simply clicking the Live Chat option on this page.