Like a former franchisor, and needing franchised my company designed for over 10 years before I actually sold it, it seems for me that I’d experienced just about every possible scenario. Most people feel that franchising is really cut and dry; you have a business agreement, people pay you a certain amount to purchase their franchised outlet, and then they operate the business or store for the 10 year term with automatic renewals.
This is a serious issue, and it happens on a regular basis than people realize. Franchisors need to demand that the correct procedures are followed, usually you run into all sorts of scenarios. Please consider all this and think on.
Yes, which usually sounds like a decent business model, nevertheless nothing is ever as basic as it appears in the franchising industry. Let me explain. Through the years, I don’t think I ever had a perfect franchise sale when everything went exactly properly; where the franchisee qualified designed for the loans very quickly, experienced a perfect resume, had an appropriate location, didn’t care to help you negotiate any terms of the franchise agreement, and everything went perfect during the decade they were in business prior to repair.
That really doesn’t happen in franchising, and although franchising is an extremely successful business structure for distributing goods, offerings, and products; it isn’t Disneyland. I doubt any organization really is.
I explained to him the fact that he had to run the business a particular way, and he said that I was wrong, because he didn’t sign any sort of agreement, and he was going to do it his way. Oh yeah great I thought, today I have a rogue franchisee on my hands, plus they are not keeping with the consistency of our brand name.
Worse, this individual wasn’t following the proper types of procedures which were part of a large fleet account we had with a nationwide company. Again because he didn’t have to follow are actually confidential operations manual, which he never read since as he said; “I never signed nothing. ” Nor did he ever before go to our franchisor schooling, which is also required of new managers which are sprinting our franchised business model, if ever the owner is not involved in the day-to-day operations.
Let me give you certainly a crazy thing who happened to us. We had a franchisee who lived on the border of Georgia and Alabama. We allowed them to have a joint sales area in both states. As a result of type of industry we was in there were different foibles on each side in the border.
One day, I happened to fill in for one our area representatives in that region, and I went to go to the franchisee on the Georgia part. When I got there, I actually was talking to his brother-in-law. Apparently he was today running the business, and your franchisee had transferred this company to him without authorization.
You see, in the franchise binding agreement there are stipulations before you copy the business to someone else, the new franchisee has to then sign the latest franchise agreement, plus they have to be approved by the franchisor. It turned out the brother-in-law was not running the business down to our confidential operations manual, he had made quite a few changes.