The new franchisee will faced a challenge regarding the initial capital. The cost of creating the franchise system required sufficient capital as the cost of supporting new franchisees usually exceed royalty revenues and franchise fees in the beginning. This is because, the capital need not only for initial investment and franchise fee, but including capital to cover building an infrastructure to support incoming franchisees in sectors including operations, marketing, administrative, and accounting, and to develop a franchise sales program. Other than that, franchisor will face with the probability abuse of any independent by franchisee that could result conflict and adverse consequences on the franchisor and franchisee relationship that lead to dysfunctional to the franchise system as a whole. Is that so, franchising system could have detrimental effects upon the maintenance of standard of performance, consistent of quality, productivity and the maintenance of desire uniform image. As the franchisor provide a proven business format to franchisee, abuse of independent will occur if standard are being compromised such as failing to meet the quality of the product or services or franchisee purchasing inferior product components from non-franchise source or failing to use promotional tool developed by franchisor.
Moreover, in order to ensure high