Taking the franchise route provides the technology, and throws open a robust and reliable support system for the entrepreneur. The entrepreneur gains access to the franchiser’s back office operating systems, help from the public relations officer to issue press releases, critical inputs from the franchise manager hardened by the experience of managing hundreds of outlets in order to handle day-to-day challenges and issues, and more. Such support systems becomes invaluable help for new entrepreneurs or business owners with limited expertise, resources or support teams.
The support systems and expertise come at a cost. The annual franchisee fees and other expenses can be hefty and take away a considerable portion of the profits. In return, the availability, reliability and effectiveness of the product knowledge, technology and support system, however, depends on the franchise. For instance, a newly established franchisee would hardly have the experience to add any value other than what any entrepreneur can do anyway. Some franhisors promise but never deliver. The availability of a support system depends largely on the track record, and entrepreneurs need to review what the franchisor promises, and talk to existing franchisees to understand whether the franchisor lives up to their promises.
Moreover, such support systems come at the cost of freedom for the entrepreneur to manage the business. The franchise agreement imposes a series of dos and don’t’s, which tie up the entrepreneur’s hands, and in effect, makes him a franchisor's employee of sorts without any pay guaranteed.