Franchising failures

This might be a long shot but I never cease to be amazed at the amount of experience people have on the org...

I'm acting for a franchisee who is packing up cos the franchise isn't paying. I'd like to know if anyone has done the same or has any experience of it. I'd dearly like to identify the company concerned cos I think that there are probably quite a few disgruntled franchisees of theirs out there but I can't in print.

Could you PM me please?

Thanks

Ed

[Gazza77]

Originally Posted by Ed

This might be a long shot but I never cease to be amazed at the amount of experience people have on the org...

I'm acting for a franchisee who is packing up cos the franchise isn't paying. I'd like to know if anyone has done the same or has any experience of it. I'd dearly like to identify the company concerned cos I think that there are probably quite a few disgruntled franchisees of theirs out there but I can't in print.

Could you PM me please?

Thanks

Ed

Not that I've any experience, but do you mean not paying as in owes the franchisee money or not paying as in is not cost effective?

Originally Posted by Gazza77

Not that I've any experience, but do you mean not paying as in owes the franchisee money or not paying as in is not cost effective?

Franchise is not cost effective and is not producing the returns represented to client at the outset. Aggressive franchising company, they don't like being told to foxtrot oscar.

[timwilky]

My brother was lucky, he was able to sell on the franchise and still works for the guy who bought him out. He ended up with major rows over percentages being payed back to the franchisee. They wanted 15% of the job price. he was happy for that to be 15% of the profit. So he was having to price himself out of work.

Was told the model works elsewhere. Might do. But not up here in Lancashire where we are careful of our brass and if somebody comes in 15% more than the competition. guess who is not going to get the job. He finally got them to renegotiate the agreement.

Once he had then been able to build the business into a profitable concern, he had lots of offers to take it off his hands

People are careful with their money everywhere, not just in Lancashire! The particular sector has severe competition, with a number of large established players. Plus it requires high unit sales as the profit per unit is fairly modest. And the franchise company demands that franchisees don't discount, so selling an overpriced product of not top quality in a severely competitive environment is very difficult.

Client didn't take legal or accounting advice before entering the agreement, and now it's gone tits up none of the options are palatable. Plus he's lost his initial investment, which would buy a double digit number of SVs, unless he claims misrepresentation, but that is going to be expensive litigation which he can't afford.

So - if anyone on here is considering a franchise - do get proper legal and accounting advice on it and do consider what are your options if it all goes pear shaped.

Its not one of these, crappy car driving scams is it??

[timwilky]

Agree with the advice Ed.

One interesting thing that came up with my brother was a large company well establish in the domestic refurbishment arena, decided to enter that aspect that my brothers franchise covered. and made an offer to buy the franchise business.

In future all new work would be done in the name of the proposed purchaser using their letterheads etc. To a man every franchise holder demanded the franchisee refund the franchise as they considered the proposed purchaser would lower the value of the name and service they supplied.