Franchise agreements are customarily drafted by franchisors and tend to be one-sided. If you own a franchise, you may be experiencing certain problems relating to over-saturation of your trade area. Some franchise agreements may provide for a protected area, but frequently franchisors will place another franchise on the border of a protected area and the two franchises will end up competing for the same customer base. This type of encroachment is usually not a breach of the franchise agreement and is a difficult situation to remedy.
Many franchisees see their profits decline as more franchised units are established.
Other issues affecting current franchises include advertising fund expenditures and lack of support. Many franchisors collect advertising fees from franchisees, but have complete discretion as to how the funds are expended. Franchisees may disagree with the type of advertising chosen, but may be powerless to remedy the situation. In terms of lack of support, many franchise agreements do not obligate franchisors to perform on-going support once the franchisee has had initial training.