The Top +30 Business Risks of Franchising
- Business model had never created adequate investor returns
- Churning (serial reselling)
- Disclosure laws: false sense of security
- Encroachment (too many outlets put in territory)
- Franchisees have no say on new brand
- Franchisor corporation created to fail
- Franchisor insolvency, intentional
- Head lease advantage
- Immigrants as prey
- Incompetent or predatory: for the small business investor, the outcome is the same
- Material risks cannot be accurately determined before you sign
- Mergers and acquisitions
- Monopoly
- Must buy only through franchisor (tied buying)
- Must sell business (eventually) through franchisor
- Opportunism: self-interest with deceit
- Outright scam
- Rent increase
- Renting a business causes problems down the road
- Sharecropping
- Success or failure is within the direct control of the individual franchisee
- System designed to fail for franchisees
- System ownership changes very frequently
- Tied contracting
- Trap for the trusting
- Unconscionable conduct
- Unproven business model
- Unsafe at any Brand?
- War of attrition
- Wealth is meant to be re-distributed (not created)
- Wild West of the business world
