Which of the following statements is a disadvantage of franchising?
Uninterested Franchisors: Franchisors that have little interest in the actual success of the franchise, and more interest in collecting fees from franchisees. Example: In the
early 2000s, the popularity of Krispy Kreme donuts increased rapidly, leading to a huge increase in the number of franchises. However, poor policies on the part of the main company led to struggling franchisees: huge growth led to market saturation and a weakening of the brand as franchisees were found everywhere from malls to gas stations (whereas the original appeal was as a delicacy); Krispy Kreme forced franchisees to buy equipment at very high mark-ups, weakening the franchisee profits.
Thus, the company's focus was on profits through fees and sales to franchisees rather than royalty payments. Of course, no business arrangement is without potential risks and disadvantages. While there are many advantages for the franchisor in entering a franchising agreement, some of the potential risks are:
Disadvantages to the Franchisee
Franchise costs vary to some extent because of costs associated with different kinds of businesses and with different locations. For example, a person who wishes to open a franchised employment service operation, such as Talent Force, based in Atlanta, Georgia, can get away with as little as a $7,500 fee, plus one year's starting capital investment of $50,000 to $110,000. On the other hand, start-up costs for a company like J.O.B.S., based in Clearwater, Florida, can be as little as $45,000, including a $30,000 franchise fee. Source: Boundless, http://oer2go.org/mods/en-boundless/www.boundless.com/business/textbooks/boundless-business-textbook/types-of-business-ownership-6/franchising-52/disadvantages-of-franchises-259-1362/index.html Last modified: Tuesday, August 10, 2021, 12:09 PM Which of the following is a disadvantage of franchising?Disadvantages to franchisees include high costs and royalty payments, strict product rules, lack of support from uninterested franchisors, lack of flexibility in where to locate and how to trade, and other start-up challenges.
What are 4 disadvantages of a franchise?Disadvantages of franchising for the franchisee. Restricting regulations. ... . Initial cost. ... . Ongoing investment. ... . Potential for conflict. ... . Lack of financial privacy.. Which of the following are the disadvantages of the franchise business quizlet?What are the drawbacks of being a franchisee? Drawbacks include high franchise fees, managerial regulation, shared profits, and transfer of adverse effects if other franchisees fail.
What is the advantage and disadvantage of franchising?franchising-table. |