Читать книгу Small Business for Dummies - Veechi Curtis - Страница 77

You’re smart to weigh up the negatives of franchising before you consider signing on that dotted line. Franchising may not be your cup of tea for any of the following reasons:

 You’re paying for goodwill, rather than exploiting your own creative genius: The significance of this downside depends on how much of a creative genius you really are.

 You may be committing to something you hate: Like a blind date, you have no time for a slow build-up. What if you bought a shoe franchise and developed a pathological aversion to the smell of feet? Or you bought a lawn-care franchise and discovered your inner loathing of lawnmowers?

 You have to abide by other people’s rules and decisions: Even if the franchisor’s decisions seem ludicrous, you have to stick by them. You may have to pay for advertising campaigns that seem like total duds, wear a uniform in a colour scheme you despise or sell a new product that you don’t believe in.

 You have less control over your long-term future: No matter how well you run your business, you run the risk that other franchisees may not be so conscientious, acting in ways that damage the reputation of the brand. For example, if one cafe in a franchise chain has poor hygiene standards, disappointed customers are unlikely to patronise other cafes in the same chain when they’re travelling around.

 You’re committed to ongoing costs: Almost all franchisees pay ongoing royalties in addition to the upfront fees. If these royalties are set too high, you can be left with only marginal profitability.

  You face restrictions if you want to sell: All franchise contracts (called franchise agreements) contain some restrictions regarding the sale or transfer of the franchise, mostly with the intent of ensuring the quality of your successor. While the restrictions are understandable, you may find you can’t sell your franchise as readily as you would an independent business. (This limitation is partly outweighed by the fact that a franchised brand is often worth more.)

 You face limitations regarding growth: If your franchise contract defines a specific territory, you can’t expand beyond this territory unless you purchase another franchise. Similarly, you may not be able to expand into selling online to customers outside your territory.

 You may encounter a conflict of interest with your franchisor: Any franchisor–franchisee relationship is susceptible to conflicts of interest. For example, a franchisor may feel a franchisee is failing to exploit a territory adequately, thereby underperforming and leaving gaps for a competitor to establish itself. The franchisee, on the other hand, may be quite satisfied with the extent to which it is exploiting its territory.