This a line from the owner of SureSlim. See the full article here: Big Losers in SureSlim row head to court
What’s wrong with this picture?
The franchise started in Australia (it is now in receivorship).
They moved to New Zealand and started selling franchises there, now 17 of 21 franchises they sold have failed.
How about a “royalty and marketing fee” of 29%!!!! Let’s do the math. Assuming one’s business is at the top of the food chain and one of high profit, say 50% markup before payroll, overhead and taxes. You make $50.00 USD. It costs you $50 to deliver the goods and services (this is way over the top folks!). Now you pay your royalty fee of $29.00 to corporate? You have yet to pay taxes! Are the people that bought these pink elephants really that stupid! (I’m not letting the owners off the hook here, but for all the promises in the world, I’m not giving some gypsy who sells snake oil a 29% gross profit for the rest of my days!) So, even if you’re a genius and you’re making 50 cents on the dollar, that only leaves you with a Net Profit before taxes of 21%! No accountant in their right mind would ever approve a business model like that! After suffering through a year of that, I’d make the franchisor put up my family, feed my kids until he let me out of the contract. If that’s a cult, then so be it!
The governments of the US, Australia, New Zealand, the UK, Canda and others cannot and will not be bothered to keep this from happening! They don’t want to hear about it, which is why the FTC took over the reins in the 80s during the Reagan administration. Now it just goes to arbitration. The rich and the scheming are all in bed together. They will fleece you, piece you and hang you in the rafters if you are so naive to believe the gypsies and con men who call themselves “franchisors”. And when their best friends are bankers, mortgage criminals from Fannie Mae & Freddie Mac, would you expect anything less? Who do you think funds these stupid ventures? Securitizing franchising loans is a hot investment area now that real estate is worthless.
A word to those who are entertaining any type of franchise: Ask two lawyers, an accountant, your wife and anybody else who has a brain at least three times whether buying a franchise is a good thing. And don’t do it unless you have a 100% majority “YES!”. In essence, stay the hell away from franchising. Stop the bleeding.
Bloody
BF gets it right again! Franchising is not what it seems to be. The Snake Oil comes in a pretty bottle that is licensed by the government. Don’t let this give you a false sense of security.
But, of course, prospective franchisees, who are in need of a job an income, are investing in franchises because they BELIEVE that their government wouldn’t play deaf, dumb, and blind and allow franchisors to “scam” good faith middle class citizens out of their life savings with immunity under our laws. .
The constructive fraud of a binding, non-negotiable, self-serving contract wrapped in a “mandated” government disclosure circular does generally protect the franchisor from charges of fraudulent inducement to contract made by failed and failing franchisees, in arbitrations and in the courts. The deck is conveniently stacked against the franchisees who believe they were fraudulently induced to contract in arbitrations and the courts.
The FTC Rule, in effect, in late 1979, removed franchise contracts from State common law fraud and securities law and deems that there is NO fraudulent inducement to contract even when there is a violation of disclosure law. Even when there is a violation of the FTC Rule, The FTC Rule deems that there is then NO PRIVATE RIGHT OF ACTION for the fraudulently induced franchisees and only the State and the Federal Government have the “standing” to sue and/or demand correction of the violations, etc… in the interests of the general public.
The State negotiated recissions DO NOT compensate cheated and defrauded franchisees for their sunk costs and damages, and are negotiated by the States with the view that it is the franchiSORS and their systems who must be protected because it is the Systems and not the failed or failing franchisees within the system who feed the economy and contribute to the “greatest good.”
Because, for 30 years, since the promulgation of the FTC Rule, the franchisors have been protected from fraud, and because they are licensed to sell their franchises with NO written promises of success or profits, while making actual and implied success and earnings claims OUTSIDE of the contract, they are free to sell “unprofitable” franchises that experience a high rate of failure to the public —-and they do!
And, as long as the franchisors can CHURN first-owner-builders of the franchise under cover of government regulation to grow their visibility and their profits, they do what they CAN do and franchisees remain a CALCULATED SACRIFICE to the “greatest good” of the Franchisors, the Banks and the lenders, the Mall developers, the Construction Industry, the Commercial Real Estate and REIT sector, the Advertisers, the American Bar Association, and, of course, the government, itself, in terms of taxes and revenue and job numbers that are reported to the public.
Apparently, franchising is essentially so risky for Mom and Pop franchisees and so unrewarding that the government has never considered that they could require the franchisors, the sellers of the franchise, to disclose the “known risk” to the new buyers of the franchises.
Franchises are over sold to the public under the current status quo of law and regulation as a means of joining the “entrepreneur” group, and as the means of realizing the “American Dream.”
This may be true for the franchisor, who is the Entrepreneur, but this American Dream has been the American Nightmare for too many good faith Americans who become calculated sacrifices, who are explolited by the special interests and then thrown away.
LET THE BUYER BEWARE
Multi-site SureSlim franchisee in liquidation
BIEN Pty Ltd a multi-site SureSlim franchisee within the SureSlim network in Australia went into liquidation on Tuesday 19 May 2009. A liquidator was appointed and a notice of Creditors Meeting to Consider Voluntary Winding Up has been lodged with ASIC, as stated on the ASIC Company at: http://www.search.asic.gov.au/cgi-bin/gns030c?acn=098_604_043&juris=9&hdtext=ACN&srchsrc=1
Laura Taylor, the sole Director of BIEN Pty Ltd owned and managed, with the assistance of her husband Peter Taylor, fifteen per-cent of all franchise clinics in Australia, five SureSlim franchise clinics in New South Wales, and four SureSlim franchise clinics in Queensland.
• In New South Wales, Castle Hill (opened January 2002), Charlestown (opened in January 2002), Chatswood (opened in April 2002), Central Coast (opened in April 2002), and Liverpool (opened in August 2002).
• In Queensland, Coorparoo (opened in December 2002), Strathpine (opened in July 2003), Browns Plains (opened in October 2003), and Ipswich (opened in August 2005).
Bien Pty Ltd is one of many SureSlim franchisee owned operations in Australia and New Zealand to go into liquidation.