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What Are the Cons of Franchising Out a Successful Business?
I want to venture into franchising. I had a prospect, a car accessories chain.
When I inquired, I was told that all their outlets were company-owned and that they don’t franchise out their business. I don’t understand why. Will a particular company spend extra if they venture into franchising?
Any thoughts?
Tags: franchise, cons of franchising, sucessful businessTopics: Business & Franchises | 2 Comments »
March 16th, 2010 at 2:46 pm
There are plenty of good books and magazines on franchising. The problem with franchising is simple – there are likely to be lawsuits when the franchise occasionally fails – even McDonald’s has failures. There is an ethos for the group. There need to be sophisticated management skills. It is a completely different and more complex business.
March 16th, 2010 at 7:19 pm
Franchising can be very lucrative, but at the same time there are definite cons to starting a franchise. For one, there will always be royalty fees to pay as long as you are using another brand’s trademark and business model. Also, there are often large initial costs to startup a franchise. Sometimes franchises also require long-term contracts which may be unfavorable if the business doesn’t take off.
Hope that helps.