Disadvantages of Franchises

1. High franchising fees and royalties

Buying into a franchise is not cheap. Franchisers often charge high fees for the right to use the company name. They also charge franchise owners a share of the earnings, or royalties.

4. Limited Product Line

Franchise agreements allow stores to offer only approved products. Franchisees usually cannot launch new product lines that might appeal to local customers.

2. Strict operating standards

Franchise owners must follow all the rules laid out in the franchising agreement for such matters as hours of operation, employee dress codes, and operating procedures. If they don't , the owners may lose the franchise.

3. Purchasing restrictions

Franchise owners must often buy their supplies from the parent company or from approved suppliers.