Another disadvantage of buying a franchise is the restrictions that are placed upon you as a franchisee. You are purchasing a territory from the franchisor so while receiving support and operating from a successful business model, you are restricted to your potential market. You may only operate within the boundaries set by the franchisor for the territory you have purchased. This means you may only deliver services within these boundaries but in addition, you may only advertise your services within your territory.
In addition to the disadvantages of buying a franchise already mentioned, there is the obvious cost you incur via the franchisor management fee. This amount can vary between all franchisors but you can find that you are having to pay in the region of 5% of your company’s turnover to your franchisor permanently.
You will have less control over your business. Buying a franchise will have a term attached to the contract. As an example let’s use 5 years. If at some point within the 5 years you decide to sell the business you may find it more difficult than if you start a company yourself because the franchisor will have to provide approval of the buyer before you are permitted to sell.
As mentioned above, a final disadvantage of buying a franchise is the term. You may purchase the franchise on a 5 year term agreement and at the end of this 5 year period the franchisor is not obliged to renew the franchise in which case the business reverts to the franchisor.