As a former franchisor, and developing franchised my company meant for over 10 years before We sold it, it seems in my opinion that I’d experienced in relation to 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 run the business or store to get a 10 year term by means of automatic renewals.
Yes, that sounds like a decent business model, then again nothing is ever as straight forward as it appears in the franchising industry. Let me explain. Over the years, I don’t think I ever endured a perfect franchise sale the place everything went exactly properly; where the franchisee qualified designed for the loans very quickly, possessed a perfect resume, had a perfect location, didn’t care to help you negotiate any terms with the franchise agreement, and all sorts of things went perfect during the several years they were in business prior to renewal.
You see, in the franchise deal there are stipulations before you switch the business to someone else, the fresh franchisee has to then indicator the latest franchise agreement, and have to be approved by the franchisor. It turned out the brother-in-law was not running the business as per our confidential operations manual, he had made quite a few shifts.
I explained to him the fact that he had to run the business a clear way, and he said that I was wrong, simply because he didn’t sign any kind of agreement, and he would do it his way. Also great I thought, today I have a rogue franchisee on my hands, and they are not keeping with the consistency of our brand name.
One day, I appeared to fill in for one your area representatives in that vicinity, and I went to visit the franchisee on the Georgia part. When I got there, I actually was talking to his brother-in-law. Apparently he was nowadays running the business, and this franchisee had transferred the market to him without authorization.
That really doesn’t happen during franchising, and although franchising is an extremely successful business model for distributing goods, services, and products; it isn’t Disneyland. I doubt any business really is.
Let me give you an example of a crazy thing who happened to us. We a franchisee who resided on the border of Atlanta and Alabama. We allowed them to have a joint property in both states. With the type of industry we was in there were different rules and regulations on each side for the border.
Worse, the person wasn’t following the proper types of procedures which were part of a large fast account we had with a domestic company. Again because the person didn’t have to follow happen to be confidential operations manual, which he never read considering as he said; “I never signed nothing. inches Nor did he truly go to our franchisor schooling, which is also required of new managers which are running our franchised business model, if the owner is not involved in the day-to-day operations.
This is a serious issue, and it happens usually 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.