IGCSE, A Level Business Student Forum

Q10 Analyse the disadvantages of a franchise for franchisor. [6]

Possible Structure:
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

(kn)ltd creative opportunities
(an)so the workers could be bored
(an+) demotivating them and decreasing productivity
(kn) rules and regulation
(an)it can be time consuming to put rules and regulations since plenty of control is needed for it to be implemented
(an+) decreasing the time for other important things

[KN] Loss of control
[AN] When a business franchise, it must share a degree of control with franchisees. While the franchisor provides guidelines and standards to maintain brand consistency, franchisees have a level of autonomy in daily operations.
[AN+] This can lead to variations in customer experiences and service quality across different franchise locations.

[KN] Legal and compliance challenges
[AN] Franchisors must navigate complex legal and regulatory requirements related to franchising. They need to create and manage legal agreements, franchise disclosure documents, and comply with various state and federal regulations
[AN+] This legal complexity can be costly and time-consuming for the franchisor.

[KN]loss of control
[AN]this loss of control can result in variations in customer experience and brand consistency across different franchise units
[AN+]maintaining brand integrity becomes more challenging

[KN]continuation of support and training
[AN]Inadequate support and training can lead to operational inefficiencies, lower customer satisfaction, and ultimately, the failure of franchise units.
[AN+] Establishing robust support mechanisms, such as comprehensive training programs and access to operational resources, is critical for the success of the franchise network.

[KN] Easy loss of control
[AN] Franchisor needs to give some of their control to the franchisee and they might change strategies, changing customer experiences.
[AN+] Which might or might not be preferred by customers and if not preferred by the customers it might lead to a decrease in the sales of that specific franchise and decrease in the profit that is received to franchisor.

[KN] Brand image is always on the line.
[AN] Franchisor needs to take care of the business but if franchisee's behavior is not good with customers it might affect the brand image.
[AN+] Effect on brand image will cause loss of customers from all franchises, leading to losses.

[KN]financial investment
[AN]it requires a signifant investment in administraton and traiing process and franchisor also need to spend money on the franchise agreement [AN+]all this cost could be a burden on the franchisor

[KN]brand risk
[AN]if one francisee can perform poor it could effect the whole brand .
[AN+]thus reduce the brand image and also lose of great money

[KN] loss of control
[AN] Franchisors have to give up some control over their business to franchisees, who run individual locations. They can't dictate every detail.
[AN+] This can lead to variations in the customer experience and operational procedures.

[KN] Quality Control issues
[AN] It's tough to make sure all franchise locations offer the same high quality. Maintaining consistent standards is not always easy.
[AN+] thus leading to lesser output as services wont be of higher quality

(Kn) does not live up to brand reputation (an) if the firm does not work like the other one then there would be unsatisfied customers who expect the same quality from the same brand (an+) this can deteriorate the brand image further reducing sales

(Kn) cannibalising sales (an) with too many franchises especially in nearby areas they may just try to steal customers from one another (an+) this will reduce sales and promote internal conflict

[KN] maintaining same out come
[AN] Maintaining consistent quality, branding, and operational standards across all franchise units can be challenging
[AN+] this would lead to lower brand image as some franchises can be low quality

[KN] Conflict between the franchises
[AN] conflicts between franchisors and franchisees can arise, leading to legal battles and negative publicity that can harm the brand
[AN+] Resolving these disputes can be time-consuming and expensive

[KN]Less control over the business
[AN]The franchisor may have to share some responsibilities with the franchisees which may reduce his control over the business
[AN+]Thus due to different people running different sects,quality may be compromised.Which may lead to worsened brand image

[KN]Internal conflicts
[AN]Due to different people running different sects of the business, conflicts may arise between them which can lead to Lawsuits and may ruin the brand image of the business
[AN+]thus these acts are likely to lower customer loyalty and may lead a business towards its decline

[KN] More conflicts between the franchisors.
[AN] Due to different franchisors running from the same brand they might try compete with each other which may cause the conflicts to arise between them.
[AN+] This would lead to less chances of growth of the business.

[KN] Less profit would be generated.
[AN] Most of the shares of the business would be taken by the franchisors which would lead to less profit margin.
[AN+] This would lead to less savings for the owner.

[kn] a franchiser may lose control over the franchise.
[an] as they will have to give different responsibilities and distribute roles among the franchisees leading to lower control over the business
[an+]and therefore if those franchisees fail to fulfil the roles and responsibilities it will worsen brand reputation
[kn] lesser profit would be generated
[an] as most of the shares generated by the business will be distributed amongst the franchisees
[an+] leading to lower profit margin and thus lesser savings for the owner

[KN]Quality control has to be maintained
[AN]Although the franchise business is controlled by franchisee, yet franchisor has to keep quality check on each branch eg provision of standard quality raw material to all branches if the quality is not standardised it may dissatisfy customers
[AN]leading to poor brand image


[KN]Franchisor provides training to franchise business
[AN]Training may involve experts and specialists who have to be paid which increases cost of production
[AN] leading to low profits margins

[KN]Quality control has to be maintained
[AN]Although the franchise business is controlled by franchisee, yet franchisor has to keep quality check on each branch eg provision of standard quality raw material to all branches if the quality is not standardised it may dissatisfy customers
[AN]leading to poor brand image

[KN]Internal conflicts
[AN]Due to different people running different sects of the business, conflicts may arise between them which can lead to Lawsuits and may ruin the brand image of the business
[AN+]thus these acts are likely to lower customer loyalty and may lead a business towards its decline

[kn] loss of control
[an] losing some authority and control on business procedures and decision making
[an+] may be risky and could tarnish the businesses prior objectives

[kn] risk of ruining brand image altogether
[an] If a single franchise fails, the reputation of the entire brand could be negatively impacted
[an+] business may fail as sales will decrease immensly and expenses start piling up