What Are The Disadvantages Of Franchising?

There are many benefits to owning a franchise – you become part of a proven organization; you can quickly the franchise fee is a major investment for a franchise operatorgo to market and achieve profitability; you enjoy greater buying power and economies of scale; and you can tap into the advice and experience of other franchise operators, among many other reasons.

Of course, along with the pros, there are some disadvantages of franchising, too, that you should know about. Here they are:

Paying Franchise Fees And Royalty Payments

All franchises require a “franchise fee,” an initial payment that you provide when you sign a franchise agreement. In general, it covers the cost of joining the system. Royalty payments are ongoing fees that you pay to the franchise in order to stay a part of the system, and most franchises require them as well.

These fees can certainly prove to be expensive, and they might be prohibitive for some entrepreneurs. However, even with a franchise fee, the startup costs for franchise operations are generally lower than those for independent business ventures, where everything – the operational model, marketing, brand building, uniforms, equipment, etc. – must be generated from scratch.

And while some franchises give you little in exchange for your initial fee, others give you a lot of return for that investment. For example, the  Bin There Dump That franchise fee covers comprehensive training and support.

As for royalty payments, while some franchises calculate the payments as a percentage of your profits, our royalty payments are determined by the number of trucks and bins you have in operations, allowing you to plan and budget in advance, without penalizing you for doing well.

Sticking To The Franchise Model Is A Must

If you like to have total control of every aspect of your business down to the most minute detail, or if you are apt to make changes for the sake of making changes, then franchise ownership is probably not for you.

When you buy into a franchise, you buy into an established operational model, and in order for you to be successful, you need to stick to it. Of course, innovation and enhancements are encouraged, but you’ll need to run your suggestions by the franchise’s leadership team before putting your ideas into practice.

Territory Exclusivity Isn’t Guaranteed

lack of territory exclusivity is one of the disadvantages of franchising

In some cases, a franchise operator is granted an exclusive territory, giving them complete access to the customer base in that area. Unfortunately, many franchise territories are small, and some don’t offer territorial exclusivity at all.

At Bin There Dump That, however, we give our franchise operators access to territories that include 350,000-400,000 people and 100,000 single family dwellings – at minimum.

Becoming Part Of A Brand – For Better Or Worse

When you are part of a franchise, you are part of a brand. If that brand carries a negative connotation, or if that brand receives negative press, then your operations can suffer. That’s why it is so important to choose a franchise that has a proven track record, a strong leadership team and, above all, a great product or service that customers love.

Explore The Advantages Of Becoming a Bin There Dump That Franchise Operator

Now that you’ve got a clearer picture of some of the disadvantages of franchising, we’d like to make something else pretty clear – Bin There Dump That is a great place for a new franchise operator to enjoy a great team, a great model and great success. To learn more, download your free franchise kit today!

Images: Scrabble tiles, 7-Eleven locations

 

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