Negatives of Franchising

1. Sales- All franchise companies are franchise sales driven in the beginning, this means you must have an effective franchise-marketing program with very good sales people. Many variables can affect the franchise sales effort such as interest rates, banks willingness to make loans for your franchise, the condition of the national economy, competition, etc. In franchising, if you are not growing, you are dying.
   You have to have the franchise fee income to stay in business until you have enough franchise royalty income to reach your monthly break-even.
2. Loss of Control- When you own it then you control it, but in franchising, the franchisee controls his unit and to varying degrees runs it his way. It's here that the operating system comes into play. If you have a polished system which guarantees success if adhered to, then the control issue becomes less important. If the franchisee sticks to your systems, then it's very much as if you are operating the unit yourself. It's here also that the value of a tightly written franchise agreement comes into play. It's best to have a franchise agreement that allows the franchisee little latitude to vary from your system.
3. Managing Growth- This is a nice problem to have but it can be fatal. Franchising, by its very nature is a very fast way to expand a business, because there are few limits that inhibit growth. It's absolutely necessary to be slightly overstaffed at all times, in order that you always have the staff to serve your franchisees. This is the real key to successful franchising. Tremendous effort and resources should be focused on doing all that is possible to help the franchisees be successful.
4. Litigation- The biggest negatives in franchising are the conflicts between the franchisee and franchiser that are almost inevitable and worse still the litigations. As long as your franchisees are making money, everything is fine, but if they lose money, then conflict will arise and if you don't handle the situation well you could end up in court being accused of everything from not providing adequate training to misrepresentation and fraud.
   If it ends up in court, you will probably lose because our legal system creates a very uneven playing field for the franchiser in legal proceedings. It's the big business against the little guy. You don't want to end up in court. The way to avoid conflict and litigation is to do everything possible to support your franchises and make them successful. They simply must make money, each and every one.