Chapter 3. The Disadvantages of Franchising

There is no such thing as a free lunch—not even at a franchised restaurant or fast food operation. The advantages of franchising described in the last chapter come at a cost. By comparing the costs of franchising described in this chapter with the benefits of franchising described in the last chapter, you can better decide whether franchising is worthwhile for your business. This will also help you figure out how to compete with other firms that use franchising.

Franchising creates four types of disadvantages for companies. Because franchising is based on written contracts between independent companies, it suffers from goal conflict between franchisors and franchisees that sometimes spills over into legal ...

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