Dark Side of Franchising In India: 6 Major Disadvantages You Must Be Aware of

We know there are numerous disadvantages & advantages of Franchise Business. But, there is a dark side to choosing a franchise business.

Not all businesses offering franchises stand strong and deliver what they have promised. Many franchises in our country have faced numerous risks and as a result, failed in the market. 

Choosing the right franchise business in an opportunistic country like India is very important. All businesses offering a franchise option have one mission and that is to sell dreams.

Being a potential customer, one must not fall into such traps easily. Here are some of the greatest disadvantages of a franchise business in India:-

Lack of Authenticity 

As mentioned earlier, most companies have one mission: to sell dreams to the common man. When a common man in our country believes these fake dreams or fake promises they tend to take their franchises.

This way franchises not only lose potential customers but, they lose customer loyalty and trust. In some way or the other, it affects the life of the owner of the brand as well. 

Delivering what is promised is very important in a franchise business. Businesses that are providing franchises must be problem solvers and not be pushers.

This is one of the best ways how they can show their authenticity to people. Facts and figures of a franchise business must speak about the company. Those are the things that will effectively being in customers and clients for taking up franchises.

Company-oriented business models 

Most companies offering a franchise option in the market are highly focused on self-development rather than franchise development. Yes, there are companies that do not care about their franchisees. 

Self-growth and growing together are very important in a franchise business. Some companies charge huge royalty fees to franchisees even if they do not have any monthly sales. This proves that those types of businesses have a company-oriented business model. 

Average services/ products 

Most companies that became famous in the market might be because of their products or services. Similarly, we have many tea franchise that have become famous by selling tea in the market. In the end, we need to know that tea is just an average product that is available almost everywhere in our country. 

People willing to drink a cup of tea can easily find it at a cheaper rate in the street stalls.

They would surely not pay extra for a simple cup of tea by visiting a franchise outlet. It is because tea, is drank as a habit but other products like coffee and pizza are eaten because of its taste. 

If you happen to choose such a business then it is bound to go down immediately.

When choosing a business, one must see if that business has some unique products or services or not. There should be something different about that business so, that business stands out in the market. 

High royalty 

The royalty payment is a mandatory payment for all franchisees. Now, some businesses in our country do not charge any royalty fee but, most of them do. Yes, many of them have kept a reasonable amount from their franchises but, many charge unimaginable royalty fees from franchises. 

Franchises that cannot achieve the monthly target will surely have a hard time paying the royalty fees. People who have chosen businesses with average product or service franchises would have a very tough time paying the monthly royalty fees to their parent company. 

Volatility in the market 

Franchise business in our country is quite a new concept. This is one of the reasons why many people do not prefer to take a franchise as a primary business option in India.

This is because many new businesses that have just come up in the Indian market have started offering a franchise option without being established properly. 

Many new brands that have recently become famous in our country and selling out franchises have only created hype. Just by listening to their sad background story and becoming emotional people have taken their franchise option. But, as a result, every one of them is suffering because of improper research. 

Huge Investment and Low ROI 

Franchises surely have a huge investment to be started in the market. We do have to agree that buying a franchise is not cheap. The company might say start a franchise with the minimal cost possible but, we all know there are so many other expenses to be made. 

You also do not get any proof of when your invested amount will be returned. It might take many years for your ROI.