1851

When entrepreneurs are Googling&nbsp;<a href="https://1851franchise.com/7-franchise-opportunities-ideal-for-young-franchisees-2719253">franchise opportunities</a>, they may come across this statistic: “Studies show that franchises have a success rate of approximately 90%, as compared to only about 15% for businesses that are started from the ground up.” Turns out, that stat is&nbsp;<a href="https://www.entrepreneur.com/franchise/what-is-the-real-survival-rate-of-franchised-businesses/227394?utm_source=1851franchise.com&utm_medium=article&utm_campaign=5-ugly-truths-about-franchising-2720857" target="_blank" rel="nofollow">completely unproven</a>. Support, brand recognition, lower costs — we’ve all heard of the advantages of franchising, but that doesn’t mean there aren’t horror stories.&nbsp;<a href="https://subwayfranchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=5-ugly-truths-about-franchising-2720857" target="_blank" rel="nofollow">Subway</a> franchisees were&nbsp;<a href="https://1851franchise.com/subway-franchisees-demand-concessions-from-owner-deluca-in-scathing-letter-2715546#stories">stuck in their contracts</a>,&nbsp;<a href="https://1851franchise.com/buying-a-mcdonalds-franchise-the-pros-cons-2720750">McDonald’s</a> franchisees were&nbsp;<a href="https://1851franchise.com/mcdonalds-faces-1-billion-discrimination-lawsuit-from-52-black-ex-franchise-owners-2713798">suing for discrimination</a>&nbsp;— the list goes on and on. While there are several reasons to choose franchising, there are also several reasons why a franchise can fail.There Can Be Unrealistic ExpectationsWhen potential franchisees evaluate a concept, they usually go straight to the bottom line: how much money can I expect to make for my investment? This information is primarily found in a franchise brand’s&nbsp;<a href="https://1851franchise.com/how-to-make-sense-of-item-19-in-an-fdd-2714788">Item 19</a> of the FDD, a document that outlines financial performance representations.&nbsp;But it is incredibly important to keep in mind that these are not financial&nbsp;guarantees. Owning a franchise is risky. A lot of factors will go into whether an individual location matches the success of existing locations across the country — market, staff, timing, etc. Franchisees need to do their&nbsp;<a href="https://1851franchise.com/10-tips-for-performing-franchise-due-diligence-2191">due diligence</a> and&nbsp;<a href="https://1851franchise.com/before-you-sign-an-agreement-talking-with-franchisees-2718507">talk to franchise owners</a> to really get the inside scoop on the potential risk of opening a certain franchise.&nbsp;There are Serious Legal ObligationsInvesting in a franchise comes with a myriad of&nbsp;<a href="https://1851franchise.com/the-most-common-franchise-legal-issues-and-how-to-avoid-them-2703036">legal considerations</a> that some entrepreneurs may be uncomfortable with. For example, many franchise agreements include a non-disparagement clause, which states that owners will not say anything negative about the company, their service, etc. This may lead to some sticky situations during the validation process, where existing owners may be hesitant to give you the truth due to their legal obligations.&nbsp;Most brands also include a&nbsp;<a href="https://1851franchise.com/senator-calls-for-ftc-sba-crackdown-on-franchising-2715484">non-compete clause</a>, which states that franchisees are not allowed to invest in or share information with competitors in the future. This is another factor that needs to be kept in mind.&nbsp;There Is a Lack of ControlPerhaps one of the most obvious downfalls of investing in a franchise is the lack of control that comes with following someone else’s guidelines. As opposed to the freedom that comes with starting a business from scratch, franchisees will need to abide by the rules and procedures set by the franchise. This means riding the waves of management changes, acquisitions, supply chain issues, marketing strategy tactics, consumer habits and labor market concerns. Subway franchisees, for example, have long complained about the&nbsp;<a href="https://www.theguardian.com/tv-and-radio/2022/may/23/john-oliver-subway-franchisees?utm_source=1851franchise.com&utm_medium=article&utm_campaign=5-ugly-truths-about-franchising-2720857" target="_blank" rel="nofollow">strict supply chain guidelines</a> that prohibit them from making a better profit.&nbsp;If absolute control over every aspect of the business is something you are after, franchising may not be the best route, although some concepts grant owners more freedom than others.&nbsp;It's a Lot of Hard WorkOne of the key advantages of franchising is the ability to follow a proven system that, ideally, will make your life easier in the long run and eliminate many of the challenges associated with starting a business. Still, that doesn’t mean ownership will be a breeze. Depending on the franchise concept, owners may be expected to run operations themselves for a certain&nbsp;<a href="https://1851franchise.com/how-long-it-really-takes-to-buy-a-franchise-2704112">timeframe</a>, which will require being on-site day in and day out. Additionally, many brands have a certain timeline required for opening, which will mean incoming franchisees will need to put in the work to meet deadlines.&nbsp;It Requires Major Accountability&nbsp;A franchise agreement is a serious legal document, and it should not be taken lightly. Some brands, for example, require franchisees (and their spouses) to make a personal guarantee that means if financial obligations are not met, the franchisor can take their franchise away, put a lien on their home and garnish their wages. Not all franchisors will enforce such a role, but if they do, it must be disclosed in&nbsp;<a href="https://franchise.law/franchise-disclosure-document/item-3/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=5-ugly-truths-about-franchising-2720857" target="_blank" rel="nofollow">Item 3 of the FDD</a>. That is why it is so essential to go through an FDD with legal counsel before signing on with a brand.&nbsp;Franchising isn’t perfect, but it has given countless people in the United States an opportunity to achieve their entrepreneurial dreams. By coming into the process with the proper knowledge and understanding of the downsides, candidates will be able to make the right decision.&nbsp;Related articles:<ul><li><a href="https://1851franchise.com/why-should-you-not-invest-in-a-franchise-2716727">Why Should You NOT Invest in a Franchise?</a></li><li><a href="https://1851franchise.com/entrepreneur-3-reasons-why-you-shouldnt-start-a-franchise-2706421">Entrepreneur: 3 Reasons Why You Shouldn't Start a Franchise</a></li><li><a href="https://1851franchise.com/mcdonald-s-and-subway-attempt-to-moderate-frustration-among-franchisees-2715900">McDonald's and Subway Attempt To Moderate Frustration Among Franchisees</a></li></ul>

Ugly Truths About Franchising | 1851 Franchise

1851 Franchise

Despite what some experts may claim, franchising isn’t all sunshine and rainbows. Here are some of the potential pitfalls within the industry and how to avoid them.

5 Ugly Truths About Franchising

5-ugly-truths-about-franchising

Jollibee

Photo of Jollibee mascot and two smiling people in Jollibee pajamas

How Jollibee’s Culture Fuels a Global Brand People Love

franchise-culture-brand-success

petbar

petbar franchise logo tenth 10th anniversary

10 Years Strong: How petbar Turned One Dallas Boutique Into a Fast-Growing National Franchise

petbar-10-years-strong-franchise-growth

Griswold

Beaumont Enterprise: Local Woman Brings Griswold Home Care Franchise to Greater Beaumont, Texas

griswold-home-care-greater-beaumont-opening

Layne's Chicken Fingers

image of laynes chicken the Soon to be Famous™ Texas-based chicken finger franchise

Tasting Table: Layne’s Chicken Fingers Rising Fast in the Fried Chicken Market

tasting-table-laynes-chicken-fingers-growth-2025

Image Studios

IMAGE Studios Expands in Atlanta: Redefining Salon Suites in a Fast-Growing Market

image-studios-atlanta-expansion

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

How AI Is Transforming Restaurant Operations and Franchises

ai-impact-restaurants-franchises-human-centric-technology

Round Table Pizza Franchisees Take FAT Brands to Court Over Marketing Fund Mismanagement

round-table-pizza-franchisees-take-fat-brands-to-court-over-marketing-fund-mismanagement

FAT Brands Nears Bankruptcy as Creditors Demand Repayment of $1.3 Billion Debt

fat-brands-nears-bankruptcy-as-creditors-demand-repayment-of-13-billion-debt

Callaway Sells Majority Stake in Topgolf to Private Equity for $770 Million

callaway-sells-majority-stake-in-topgolf-to-private-equity-for-770-million

Keith Sizemore headshot, Radiance Holdings

Radiance Holdings Names Keith Sizemore Chief Development Officer

keith-sizemore-radiance-holdings-cdo

A Practical Playbook: Who To Call First When Franchising Your Business

franchising-your-business-who-to-call-first

CLA: Helping Businesses Navigate Growth, Compliance and Long-Term Success

cla-helping-businesses-navigate-growth-compliance-and-long-term-success

1851 Franchise Coffee & Analytics graphic with headshot of Nick Powills

What to Implement in 2026 According to 2025 Franchisee Surveys

2026-franchise-growth-strategies

The Ultimate Guide to Franchising Your Business — Phase 5: Long-Term Success — How to Prioritize Innovation and Adaptation

the-ultimate-guide-to-franchising-your-business-phase-5-long-term-success-how-to-prioritize-innovation-and-adaptation

Photo of group of dogs standing together in day care facility

Top Pet Boarding and Day Care Franchise Opportunities for 2025

top-pet-boarding-daycare-franchises

image of jerome hanway from right at home Las Cruces, New Mexico 1851 franchise franchisee spotlight

Jerome Hanway Is Building His Right at Home Franchise Around His Mission To Serve

right-at-home-franchise-las-cruces-jerome-hanway

The Top 15 Pet Supplies and Retail Franchises for 2025

the-top-15-pet-supplies-and-retail-franchises

AI-related job cuts, October U.S. job cuts, American job cut record

AI-Fueled Layoffs Reshape the U.S. Job Market — And Highlight Franchising’s Resilience

ai-job-cuts-franchising-path-forward

The 15 Top Pet Grooming Franchises To Consider for 2025

the-15-top-pet-grooming-franchises-to-consider

5 Ugly Truths About Franchising

MORE STORIES LIKE THIS