In exchange for using their brand name, the training they offer, and for the so-called collective advertising of the franchise trade mark, you must be willing to give up much of your independence.
Franchise disadvantages detail
The Downside of the Franchise Operating Plan
As a franchise owner, you must comply with the various controls and procedures established by the tanning franchiser.
Tanning franchisers do not modify their operating plan in an effort to meet the nuances of various markets since they feel what works in New York will certainly work in California , Arizona , or Alaska. Instead, InSun finds that each area offers different opportunities based upon demographic income, age and gender, competition, and a number of other factors that could affect the design of your marketing plan and the success of your business.
Imagine the financial risks associated with doing business under the assumption that the people in Texas are exactly like the people in New York or vise versa!
If you are a person who likes to make most decisions on your own or likes to define, launch, adjust, and redefine the nature of your business keeping progress with changes in the market, then perhaps owning a franchise may not be right for you.
Franchise Fees / Royalty Fees
Tanning franchisers collect payments from franchisees for the right to use their brand name and to participate in their system. Fees usually are designated as initial fees, ongoing royalty fees, service fees, license fees and advertising fees.
Other fees may also be charged for services provided. These "franchise fees" are substantial and can place you in a serious financial disadvantage; based upon our business model, we estimate these franchise fees could total $361,150 for just one salon during the first 10 years of ownership.
The Drawbacks of Franchise Contracts and Disputes
In the case of major disputes, the use of skilled and experienced franchise lawyers will usually tilt the balance in favor of the tanning franchiser.
An iron-clad franchise contract may also require you to exit the tanning industry for a number of years should you sell your salon or otherwise terminate your relationship by closing your doors. It will be a tough if not an impossible fight with their business retention lawyers to switch from a franchise to independent salon ownership. This keeps you from learning all you need to learn while operating a franchise, then switching to an independent tanning salon and becoming direct competition.
Franchise disputes are a fact of life and tanning franchisers all have their "Business Retention" departments staffed with persuasive managers and skilled lawyers. The small guy doesn't have a chance. Once you are a franchisee, they want you to stay a franchisee as that assures their future income stream. As if state and federal government intervention on small business owners isn't enough, compound all that with the rules and regulations the tanning franchisers bring to bear. The tanning franchiser's business system governs virtually all aspects of operating your business.