As a former franchisor, and developing franchised my company designed for over 10 years before I actually sold it, it seems in my opinion that I’d experienced in relation to possible scenario. Most people feel that franchising is really cut and dry; you have a team agreement, people pay you will a certain amount to purchase their franchised outlet, and then they operate the business or store for a 10 year term by means of automatic renewals.
Let me give you a good example of a crazy thing which usually happened to us. We had a franchisee who been around on the border of Ga and Alabama. We allowed them to have a joint property in both states. As a consequence of type of industry we participated in there were different rules and regulations on each side in the border.
I explained to him that he had to run the business a certain way, and he stated that I was wrong, simply because he didn’t sign any kind of agreement, and he would definitely do it his way. Oh great I thought, nowadays I have a rogue franchisee on my hands, and they’re not keeping with the consistency of our brand name.
That really doesn’t happen in franchising, and although franchising is an extremely successful business model for distributing goods, assistance, and products; it isn’t Disneyland. I doubt any organization really is.
You see, in the franchise binding agreement there are stipulations before you copy the business to someone else, the popular franchisee has to then sign the latest franchise agreement, and have to be approved by the franchisor. It turned out the brother-in-law was not running the business much like our confidential operations guidebook, he had made quite a few changes.
This is a serious concern, and it happens on a regular basis than people realize. Franchisors need to demand that the proper 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. Over the years, I don’t think I ever had a perfect franchise sale when everything went exactly perfectly; where the franchisee qualified to get the loans very quickly, possessed 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 several years they were in business prior to renewal.
One day, I occured to fill in for one our area representatives in that region, and I went to go to the franchisee on the Georgia area. When I got there, I was talking to his brother-in-law. Apparently he was today running the business, and this franchisee had transferred the market to him without authorization.
Worse, he wasn’t following the proper techniques which were part of a large fast account we had with a nationwide company. Again because this individual didn’t have to follow will be confidential operations manual, that he never read simply because as he said; “I never signed nothing. ” Nor did he at any time go to our franchisor teaching, which is also required from new managers which are going our franchised business model, if ever the owner is not involved in the day-to-day operations.