The image of the franchise business model is one of credibility and reliability. This image instills confidence, but just because a business is part of a chain does not mean that it is not without its risks. Franchises, like all other businesses, have a certain ratio of risk to reward. Purchasing a store means laying down a significant amount of capital, and as such, it is best to look at a number of issues that present themselves in the field of business.
Many new business owners believe that if a franchise opportunity fails, then he or she can simply close the store. Oftentimes in the franchise industry, the new owner must sign a personal agreement or an agreement regarding the length of time a franchise has to run. Even if the business fails, the owner is responsible for the yearly minimum franchising fee. These payments can continue on for years, and add up to significant amounts of money.
