Vera Muzzillo in direct competition with Proforma franchisees?

Find an opportunity too good to turn down Vera?  Wonder how your franchisees feel when you fund a company in direct competition with your own?  Hmmmmmmmmmmm………

http://www.insigniapromo.com/staff.html

Bloody

Questions for a Franchisor (squirm, sweat and stutter;)

We are lead to believe that franchisors tell the truth and have the franchisees’ best interests in mind.  In hindsight, franchisors lead a completely disparate life from the franchisee.  Boiled down to the most common element, franchisors are using the capital of a franchisee to promote their brand.  Nothing more, nothing less.  Anyone who tells you different is probably selling you a franchise.  Franchisors sell franchises to trusting souls while leaving the trusting souls up to their own devices when it comes to any and every aspect of running a small business in the trenches.

If you were to ask a franchisor the following questions, then  “sleep on them” for a night, then validate them with a minimum of 10 franchisees who are in the system and 10 franchisees who have left the system, you would find that franchisors are less than truthful on nearly every issue.  If you’re a franchisee in the system, it’s too late, but hopefully you’re doing your due diligence and you’re reading this prior to purchasing a hairy ball of nothing for the all-too-hefty total of your entire life savings.

1. How many of your franchisees make it past three years in your system?
2. How many of your franchisees have sued you in court?
3. How many of your franchisees own multiple outlets?
4. How many of your franchisees have left the system, really?
5. What is the success rate of your franchisees? (please include churn, terminations, bankruptcies)
6. Who are your finance partners (please name them all past and present)?
7. How many SBA loans have defaulted within your franchise?
8. What is your definition of  “churn” and how many of your franchisees have you churned in your history?
9. Can I please have a copy of the name and number of every franchisee that has left the system in the history of the franchise?
10. How many franchisees have lost to you in arbitration?
11. How many have beaten you in arbitration?
12. Do you get kickbacks from your vendors, and if so, who are they?
13. What is the turnover rate of your corporate HQ employees?
14. How many corporate employees do you commit to the health and well being of your franchisees?
15. What is the average payroll for your franchise-related employees who serve franchisees?
16. How many franchisees have you willfully terminated in your history?
17. How many franchisees have you settled with requiring the signing of a gag order?
18. Do you publish the statistics on your marketing buys?  Can a franchisee have access to the amount of its money you’ve spent in their territory?
19. How many box seats in professional sports arenas do you own?
20. How many corporate jets do you own?
21. How many company stores do you own? What is the greatest number you have ever owned.  Is this on the rise or the decline?
22. How many foreign outlets do you own and how long have you been pursuing foreign markets?
23. Which outside law firm represents you?
24. How many stores are still in operation having dropped your name and franchise?
25. Have you or any of your management staff ever been convicted of a felony, claimed bankruptcy or lost a civil case in the courts?
26. How many legal cases does your franchise have currently pending and in which venues (arbitration, federal and state)?
27. Do you provide and require the purchase of marketing services from your franchisees?  If so, who is your CMO or VP of Marketing?
28. How many franchises have you owned, do you currently own (if any) and what are they?
29. Have you ever operated an individual franchise in this system and if so, for how long?  Were you profitable?  If so, please explain.
30. Finally, would you let a child or relative of yours own one of your franchises?

Bloody

Franchisee Recourse

Many of you have faith in the system.  This is why you bought into a franchise, are looking at buying into a franchise or sadly, have been burned and turned into ash by a franchisor.  Some have said that those of us who have been burned simply want to rant and throw the whole system out (the baby with the bathwater).  This is true if franchising stays in its current condition.  Franchising could be a great model, but not until there is recourse on behalf of the franchisee.  Today, recourse is non-existent.  As a franchisee, here are your options:

Scenario:  You’ve run into a snag.  No matter the snag (financial, operational, marketing, sales, functional or strategic), you are at a point where you don’t have the resources or the knowledge to go it without some assistance.  The normal course goes something like this:

1. Call the franchisor, who gets back to you a week later and simply says “You’re just not doing what we told you to do, keep trying”.  Or perhaps “You’ll need to buy another franchise to increase your revenue”.  (This isn’t an option because you’re already up to your eyeballs in debt.)
2. You call other franchisees to get support and find out they’re in the same boat and they have no answers. (Bitch and moan sessions break out.)
3. You seek out help from your friendly neighborhood lawyer, all to find out he has no expertise in this area and getting any advice from him is just plain stupid and doesn’t apply. (I pity those of you who trust main street lawyers with your livelihood.)
4. You read your contract and find out just how lopsided it  truly is and you now realize you’ve been effed (or “had” if you aren’t yet mad as hell by now).
5. Now you’re really in a pinch and you start thinking about any other recourse you might have.  Let’s just say you’re not an evil person so sabotage or ambush are not considerations of your recourse.
6. Considering you feel you’re very resourceful, you call your local franchisee association (assuming there is one – which means you’re in the minority).  After six months of feeling these people out, you realize its rife with lukewarm blowhards who have no clue as to how to get anything accomplished, while there are slight glimmers of hope from a few conversations, only to realize that corporate has infiltrated the association and everything submitted is “taken under advisement” never to see the light of day again!
7. Finally, you’ve done all of the nice guy things that can be accomplished, so you pull all the stops and you seek out franchisee-only law firms.  After several confusing discussions, you realize that the lawyers will cost you a fortune in hourly fees considering most will not take a contingency case.  Contingency cases must be a slam dunk and this rarely occurs when the UFOC/FDD is written 99% in favor of the franchisor.  The UFOC/FDD is loaded with intangible statements including “good faith” and “disparaging” types of words which do not and will not do the franchisee any favors with most judges.  The law firm will ask you enough questions to figure out whether the case is egregious enough to be considered a contingency or a class-action or you are stuck with arbitration. (Class action suits only benefit the firm and in almost 100% of all cases, the franchisee will only get a partial portion of their initial sunk costs back, about 5 years after engagement if one wins the suit.  The judge in these cases now holds all the keys to your future.)
8. Let’s just say you read the FDD and you ask your competent lawyer about the clauses of “arbitration”.  You find out that you cannot even go to court because you don’t have a case large enough, or it cannot be monetized and you are therefore subject to arbitration.
9. At this point, you either have to have the reserves to hire the firm on a retainer basis ((you now have to take a second or third or pull all of your life savings together (provided you have any left) to defend what you’ve already sunk into the venture)).  If not, you simply give up and either suck it up and swallow the franchisor’s bullshit or you close up shop and walk away a “loser”.  The franchisor can simply put you into the loser’s category and in court, you haven’t a chance in hell of ever convincing a judge or jury otherwise because he has statistics of successful franchisees and unless you can refute them, his word is way more viable than yours.  After all, he’s a successful franchisor and you’re just a low-life franchisee.
10. Maybe you do have a rather egregious case and the firm takes your case on a contingency basis.  First, they will need a retainer.  If you don’t have $50,000 to throw into a retainer, then you have to fund it with a loan or even worse, you ferret out other franchisees to see if you can rally the troops.   (You know from previous conversations that you’re not alone, but for fear of retribution, most are not as ballsy as you and you will have to do this with great fear and trepidation to avoid this getting back to the franchisor making you vulnerable to having your franchise terminated with/without cause).
11. Once you take action with a firm, regardless of contingency, retainer, class-action or some combination thereof, you now are going to be terminated and marked.  You will have to go out and find another way to make a living in the meantime.  Wasn’t buying into a franchise the alternative to having to go back into the corporate hell hole in the first place?

Conclusion:  There is no viable recourse for franchisees.  Even with a settlement (see the previous post about a Quiznos franchise awarded in favor of the franchisee over a 4 year period), you are subject to appeal.  And trust me, the franchisor has more time and money (your money I might add) and will pursue any and every possible remedy (with your money I remind you) to keep you from exposing them.  See the post below placed on Bluemaumau.com by the owner of a franchise when I called him on the carpet for being a dishonest franchisor:

hello all….bloody franchise is a nameless, shameless liar and malcontent. he/she seems to be hell-bent on trying to destroy the institution of franchising with malicious and false attacks on franchisors and their people at his blog and with persistent emails to people in organizations he wants to attack.

he/she attacks real people with real words but all the time refuses to expose hie/her real identity. my caution to you is to be very wary of any communications you have with him/her. his/her ONLY agenda is to destroy all who are part of the franchise family of franchisors and service providers.

hello bloody….we will find you. we will find out who you really are. and because of your malice, libesl and other counts we will seek all remedies the courts allow. you are a coward to hide behind an alias and attack real people. we will find you. and we will crush you. you are a coward. you are a liar. you are a loser. and if you have anything left to lose…you will lost it, too. that’s a promise.

So franchisees, there are no conventional recourse options.  Legal is in it for the money.  Franchisee-only lawyers are in it for the money – they have to be!  If they play both sides of the fence, they cannot be trusted!  The courts don’t have a clue and with the changes in franchising, the laws of the court have been replaced with franchisor-friendly arbitration firms who schmooze the franchisors to get the cases.  You have no options there either.

“So what are my options?” asks the franchisee.

“Aside from criminal, civil or libel actions against the franchisor, going to the press or organizing other victims of your franchise brand to bring grass-roots marches on the front steps of the franchisor, there are none!”  – Bloody