Dangers of Entering A Franchise

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Australia protects franchisees. I have still seen horror stories. I am not however talking about them. I’ve seen families lose everything. I’ve seen multinational franchisors go bankrupt and fly home shamed. 20131114-200851.jpg

Today I’m talking about simple competitiveness. It is simply impossible to compete in a highly competitive environment when you are in a tightly controlled licence agreement.

Now I am not saying all franchises are bad. I’ve seen Salsa’s (Boost Juice’s Mexican brand) open in Northland Preston only to be valued at $1million within a year. Success! Franchises offer the following benefits to a Franchisee:

– Minimal Planning
– Branding & Marketing
Turnkey business processes
– Customer service manuals
– Refined products and services
– Brand equity
– Support

However if you are a cafe or any other business in a highly competitive market place being a franchise may mean your hands are tied:

  • You can’t change the price of your coffee
  • You can’t change coffee providers
  • You may not be able to change suppliers
  • You cannot change any of the marketing – even adding a sign or a black board to your counter!
  • In these times of extreme competition and the remnant of a global financial crisis be aware of the benefits and the limitations of becoming a franchisee.

    Consider the benefits however please do your research.

    If you are in trouble please visit www.franchise.org.au

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