The disadvantages of being a franchisee may include:

• Restrictions being imposed on the way you operate the business, as you will be required to adhere to the franchise agreement and the franchise system operations manual—e.g. this may include opening hours, advertising requirements, products and services sold, pricing and geographic territory;
• An ongoing commitment to pay royalties and advertising fees in addition to your initial capital investment;
• A requirement to upgrade the franchise premises and fit-out periodically.
• A requirement to acquire goods or services from an approved supplier, which may include the franchisor;
• The reputation and future profitability of your franchise may be damaged by the behaviour of a rogue franchisee or a bad business decision by the franchisor;
• The term of the franchise agreement is limited and you may have little input on renewal options or termination, depending on the terms of your contract; and
• Your franchise may be terminated if you breach the Franchise Agreement.

The terms of the Franchise Agreement and the operations manual may restrict you from being able to respond independently to market fluctuations and changes to market dynamics. You may be dependent on your franchisor for flexibility and innovations in product and service delivery.