Disadvantages of the franchise system
For the franchisor
- Risk of loss of uniqueness
Intellectual property, trade secrets - the wider the franchise network, the higher the risk of information leakage.
- The threat of creating a serious competitor.
There is a risk that the unscrupulous franchisee will not immediately extend the license agreement, but will continue its activities, studying the entire internal structure of the franchisor's business.
- Reputational risks
One random mistake of the franchisee can create a negative attitude of consumers towards the brand as a whole.
- Lack of sufficient income