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.
5. No/Declining Goodwill: The parent company either has no reputation or goodwill or the existent goodwill is on the decline.
6. Unsatisfactory Financial Transactions: The 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 Terms: Terms 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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