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question.jpgIn Business Law

What are the disadvantages of buying a franchise?

While there are certain advantages to buying and running a franchise, particularly the established business that you get to slide into, there are also some downsides. One of the biggest disadvantages is that you must pay an ongoing franchise fee to the franchisor. The initial fee is likely more than you would have to pay in costs when starting up a non-franchise business entirely on your own. Worse yet, you have to pay this franchise fee in perpetuity, so you have an ongoing monkey on your back, even after the advantages of being a franchise may have worn off. In addition, the franchising business gets to act, to some extent, as your boss, so you are not really running your own business on your own, which may defeat the purpose in starting your own business to begin with. Finally, when starting a franchise, you will have to enter a franchise agreement with the franchisor, and these agreements usually favor the franchisor tremendously, and you have little ability to make changes to it.