When Small Business Franchise is not Advisable

Though franchise businesses, often, are attractive tut sometime it may be a problem and unprofitable for the franchisees. Let’s find out when small business franchise is not advisable. As such, a close study of the circumstances is urgently called for to arrive at a cone decision.

Under the following situations owning a small business through a franchise is not advisable:

When small business franchise is not advisable

1. No Sizable Demand: The market study reveals that for convention/cultural reasons, the proposed service, at present, has no sizable demand within the territory for which the franchise is sought.

2. Unencouraging Buying Habits: The number of possible customer and their buying habits territory is not an acceptable level.

3. Too Many Litigation: The parent company is known to have been involved in too many litigations with many of its franchisees on different issues, otherwise manageable.

4. Existent Franchisees: An unhealthy competition of the same product/service already prevails in the market for the proposed products for which franchise is sought. This occurred for reasons of the existence of a number of franchisees of the same product/service of the same parent company.

When small business franchise is not advisable
When small business franchise is not advisable

5. No/Declining GoodwillThe parent company either has no reputation or goodwill or the existent goodwill is on the decline.

6. Unsatisfactory Financial TransactionsThe record of financial transactions of the parent company with their existing franchisees as well as their bankers is known to be not satisfactory.

7. Unfavorable TermsTerms and conditions contained in the contract/agreement are found to be mostly parent company biased and not favorable for the franchisee who has applied for such facility.

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