Advantage and disadvantage of franchise opportunities
When considering the franchise business, it is crucial to know that you are really involved in the sales process. If you’re good at sales, franchisors will definitely go to sell you on their systems, and you’ll work with sales executives who usually get commission to generate leads to enter into franchise deals. When we talk about European franchisees, we must take care of several laws. In fact, every little detail, from the willingness to understand to working with money-related information, must be deliberately recorded in an agreement.
Between the sales process, you will always hear about the various benefits that each franchise system has to offer. But in many situations, these systems also have limitations. Let’s understand this with some examples:
Advantage or disadvantage of franchise opportunities
1. Designated providers
It is highly desirable that franchisors ask their franchisees to buy the product only from selected suppliers; This case is valid only for product-based franchises that offer products and services. The benefit of asking franchises to make a purchase from the designated vendor is providing the same services and products to the customer and also reducing the burden of obtaining the product.
On the other hand, the downside with the designated vendor option is delaying delivery or what happens if the supplied products don’t meet customer expectations. If you are contractually bound with the franchisor and cannot find a possible solution to this, this could create a big problem for you and your business down the road. In that case, a franchise agreement attorney can provide a solution to this problem.
2. Advertising funds
A centralized advertising fund in a franchise system can benefit the right franchisees. But wait a minute to consider a few things before contributing an amount of your income. It means that, in a typical franchise agreement that is generally created by a franchise agreement attorney, the franchisees do not receive any benefit on their contributions. If the franchisor believes that he can generate a good amount of income by concentrating his marketing efforts in a particular region, even if his franchise is located elsewhere, he will hardly notice any posts directed at his region.
Furthermore, franchisors always reserve the right to use the franchisee’s share for administrative expenses and advertising funds are never operated transparently.
3. Franchise territories
If, just in case, a franchisor is offering franchise territories, it is crucial to understand what franchise territories means. Generally, different franchisors assign rights to different territories, depending on their geographic scope with the uncertainty of exclusivity.