As a former franchisor, and having franchised my company for over 10 years before I actually sold it, it seems for me that I’d experienced just about every possible scenario. Most people think that franchising is really cut and dry; you have a team agreement, people pay you a certain amount to purchase their franchised outlet, and then they get the job done the business or store for any 10 year term by means of automatic renewals.
Let me give you an illustration of this a crazy thing which usually happened to us. We a franchisee who enjoyed on the border of Ga and Alabama. We allowed them to have a joint location in both states. As a consequence of type of industry we took part in there were different rules on each side in the border.
This is a serious concern, and it happens usually than people realize. Franchisors need to demand that the the right procedures are followed, usually you run into all sorts of circumstances. Please consider all this and think on.
Yes, the fact that sounds like a decent business model, nonetheless nothing is ever as straight forward as it appears in the franchising industry. Let me explain. Over time, I don’t think I ever endured a perfect franchise sale the place everything went exactly perfectly; where the franchisee qualified designed for the loans very quickly, experienced a perfect resume, had a perfect location, didn’t care to help you negotiate any terms for the franchise agreement, and everything went perfect during the 10 years they were in business prior to renewal.
Worse, he wasn’t following the proper procedures which were part of a large fast account we had with a domestic company. Again because the guy didn’t have to follow are actually confidential operations manual, of which he never read considering as he said; “I never signed nothing. inch Nor did he truly go to our franchisor teaching, which is also required from new managers which are running our franchised business model, in case the owner is not involved in the day-to-day operations.
I explained to him which usually he had to run the business a clear way, and he proclaimed that I was wrong, since he didn’t sign any kind of agreement, and he would do it his way. Oh yeah great I thought, today I have a rogue franchisee on my hands, and maybe they are not keeping with the consistency of our brand name.
You see, in the franchise agreement there are stipulations before you transfer the business to someone else, the fresh franchisee has to then indicator the latest franchise agreement, and they have to be approved by the franchisor. It turned out the brother-in-law was not running the business as per our confidential operations information, he had made quite a few adjustments.
One day, I materialized to fill in for one of the area representatives in that vicinity, and I went to visit the franchisee on the Georgia area. When I got there, We were talking to his brother-in-law. Apparently he was now running the business, and your franchisee had transferred the market to him without acceptance.
That really doesn’t happen in franchising, and although franchising is an extremely successful business structure for distributing goods, services, and products; it isn’t Disneyland. I doubt any organization really is.