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.
- How many of your franchisees make it past three years in your system?
- How many of your franchisees have sued you in court?
- How many of your franchisees own multiple outlets?
- How many of your franchisees have left the system, really?
- What is the success rate of your franchisees? (please include churn, terminations, bankruptcies)
- Who are your finance partners (please name them all past and present)?
- How many SBA loans have defaulted within your franchise?
- What is your definition of “churn” and how many of your franchisees have you churned in your history?
- 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?
- How many franchisees have lost to you in arbitration?
- How many have beaten you in arbitration?
- Do you get kickbacks from your vendors, and if so, who are they?
- What is the turnover rate of your corporate HQ employees?
- How many corporate employees do you commit to the health and well being of your franchisees?
- What is the average payroll for your franchise-related employees who serve franchisees?
- How many franchisees have you willfully terminated in your history?
- How many franchisees have you settled with requiring the signing of a gag order?
- 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?
- How many box seats in professional sports arenas do you own?
- How many corporate jets do you own?
- How many company stores do you own? What is the greatest number you have ever owned. Is this on the rise or the decline?
- How many foreign outlets do you own and how long have you been pursuing foreign markets?
- Which outside law firm represents you?
- How many stores are still in operation having dropped your name and franchise?
- Have you or any of your management staff ever been convicted of a felony, claimed bankruptcy or lost a civil case in the courts?
- How many legal cases does your franchise have currently pending and in which venues (arbitration, federal and state)?
- Do you provide and require the purchase of marketing services from your franchisees? If so, who is your CMO or VP of Marketing?
- How many franchises have you owned, do you currently own (if any) and what are they?
- Have you ever operated an individual franchise in this system and if so, for how long? Were you profitable? If so, please explain.
- Finally, would you let a child or relative of yours own one of your franchises?
Bloody
Bloody Franchise 