• Developing a franchise network can be expensive at the outset, both in terms of management time and capital outlay
• Your investment cannot be recovered until franchisees are appointed and you start to receive initial fees and a regular income from them
• You receive only part of the profit made by individual franchisees
• Some franchisees may try to reduce the amount of their management service fees by not disclosing all their income
• To protect the good name of your company, you need to monitor the sales performance and quality standards of each franchisee. It is not always easy to enforce contract terms relating to dress, decor and marketing methods
• A successful franchisee may try to change the style and direction of your business
• A franchisee will gain in-depth knowledge of your business and may use it to set up as a competitor
• You must be sure that the people you select as franchisees can accept the responsibility and stress of running a business
• Franchisees cannot be treated like managers. They are independent business people in their own right. Communication is important and people management skills are vital.

Important Notice for Franchising