Often a franchise has little control over the brand, yet to be successful the franchisee must be the biggest brand evangelist. That can put stress on the brand. For example Subway franchisees love the Jared campaign because it brings people in the stores. Pressure from franchisees to keep Jared caused Subway challenges with its advertising firm relationships which wanted to try something new. Stress can produce great marketing though, the resulting "Five Dollar Foot-long" campaign being a perfect example.

Sales and marketing tools can also be expensive with no room for creativity in reducing costs. For example Avon reps must purchase their own catalogs, and perhaps they only really want to market skincare products to prospects online. Avon is challenged to find sales and marketing tools that will suit the needs of most and keep the brand in tact.

Keeping a brand fresh yet true to its core is difficult in any business, but it seems even more difficult for franchises. McDonald's now has premium coffees and fresh fruit smoothies. Yet both have been a long time coming for franchisees. Or when Conan took over The Tonight Show franchise for Jay Leno, the make up of viewership changed significantly, too much for the brand to take by management standards. Sometimes the result is failure, such as the recent bankruptcy of Blockbuster, unable to change their franchise business model fast enough to keep up with Netflix.

Gail Wallace

President, Bellwind Consultants

Posted on Oct. 20, 2010

There can be several disadvantages to owning a franchise and one has to do one's homework.

Here are several red flags that the franchise may present that should make you think twice:
1. They will only let you talk to certain selected franchise owners rather than any other owner you want.
2. Vague promises of support in marketing, management, etc.
3. Lack of or poor training. For example, one pizza franchise has extensive training in marketing, quality control, pizza making, customer service and management while another one spends 3 days on marketing and 2 hours on making pizza.
4. The parent company wants to pick your location based on some set of demographics and may ignore that you would have 10 competitors in a 5 block radius.
5. They do not offer a "protected territory of some sort." You don't want to wake up one morning to find another franchise 2 blocks away.
6. They may tell you how much you will make but is it realistic in your local economy? Buying a franchise for some luxury goods store when your area has high unemployment and a very depressed market would make their estimate likely to be very unrealistic.
7. Is it a seasonal business such as tax preparation? Remember, any lease will have to be paid for all year.
8. Is the brand one that is known in your area already or will it be new? A known brand has an advantage because it is riding on the coattails of others although a brand can also get a bad reputation in a specific area for one reason or another. If it is a new brand, then you may have additional marketing expenses just like any start-up company might have. Will the company help you with that or are you on your own?

If you cannot get answers to these issues either from other owners, research, or the parent company then you may be making a big mistake. Take the stars out of your eyes and focus on the real value of the franchise and the long term view.

Andy Salmon

Business Advisor, Contributing to business success through advice, planning & the development of innovative solutions

Posted on Nov. 3, 2010

Hi Chris,

Based on my experience I'd say the following;

1) Lock - in. This isn't necessarily a downside per se however some of my clients who are franchisees have reported that they would have preferred shorter contract periods with additional end of contract options.

2) Other franchisees - Again, this isn't necessarily a downside however if some of the other franchisees aren't up to scratch, then this could be damaging to the brand and, subsequently your business.

3) Lack of freedom. The franchisee will want to protect the brand. In doing so there will likely be certain restrictions on how you can trade - For example geographically, selling only certain specific products and / or services, purchasing from certain pre - selected suppliers. If you like to "do your own thing" some franchise systems may seem a little too restrictive for you.

I wrote a brief about franchises that you may find useful. It can be viewed here; http://www.focus.com/briefs/small-business/what-exactly-franchise-and-how-do-...

I hope my response has been of some assistance. If there is anything else that I may be able to assist you with, don't hesitate to get in touch,

Andy.