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Unit profitability can be less than from a company operated site. This is because the profit will accrue to the franchisee with you only taking a proportion of it via the Initial Franchise Fee and on-going Management Service Fees. However, this is normally counter-balanced by the franchisee’s extra motivation.
Franchisees require a much more “encouraging” management style than employees so it often takes longer to convince them to change the way they do business than it does with employed staff.
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If a franchisee does not renew the agreement you may have trained a potential competitor – although a strong legal agreement can protect you.
Franchisees often develop a feeling that their success is based on their own ability and initiative and question the need for the continuing involvement of the franchisor. This requires careful handling and supervision by you.
As the franchisee develops the business they may well reach a comfort zone as far as income and lifestyle are concerned and may become unwilling to expand their business further.
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