IGCSE Business Studies Practice Exam 2026 - Free Business Studies Questions and Study Guide

The main disadvantage for a franchisee is the ongoing fees to the franchisor. This can include initial franchise fees as well as royalty payments based on a percentage of sales or fixed fees that are paid regularly. These fees can significantly reduce the franchisee's profit margins, as a portion of their revenue must be shared with the franchisor.

Additionally, these ongoing fees can create financial pressure, especially in the early stages of the business when revenue may not be stable. Unlike independent businesses, where owners keep all their earnings, franchisees have to budget for these fees, which can impact their overall financial performance.

As for the other options, they typically represent advantages rather than disadvantages. For example, access to market intelligence can enhance the franchisee's decision-making and marketing strategies, while increased independence in business operations and control over product supply sources are often more characteristic of independent ownership than franchising. Therefore, ongoing fees effectively stand out as a notable drawback for those operating within a franchise model.