As a former franchisor, and having franchised my company to get over 10 years before I actually sold it, it seems to me that I’d experienced just about every possible scenario. Most people reckon that franchising is really cut and dry; you have a operation agreement, people pay you will a certain amount to purchase their franchised outlet, and then they use the business or store to get a 10 year term by means of automatic renewals.
Let me give you an example of a crazy thing that happened to us. We a franchisee who been around on the border of Georgia and Alabama. We allowed them to have a joint sales area in both states. Due to the type of industry we took part in there were different rules on each side for the border.
Yes, who sounds like a decent business model, then again nothing is ever as basic as it appears in the franchising industry. Let me explain. Progressively, I don’t think I ever had a perfect franchise sale where everything went exactly perfectly; where the franchisee qualified to get the loans very quickly, previously had a perfect resume, had an appropriate location, didn’t care to make sure you negotiate any terms in the franchise agreement, and all sorts of things went perfect during the 10 years they were in business prior to renewal.
This is a serious issue, and it happens usually than people realize. Franchisors need to demand that the proper procedures are followed, also you run into all sorts of circumstances. Please consider all this and think on.
One day, I happened to fill in for one your area representatives in that section, and I went to go to the franchisee on the Georgia side. When I got there, I was talking to his brother-in-law. Apparently he was nowadays running the business, and this franchisee had transferred the business enterprise to him without agreement.
Worse, he wasn’t following the proper procedures which were part of a large fleet account we had with a nationwide company. Again because the person didn’t have to follow are confidential operations manual, which inturn he never read because as he said; “I never signed nothing. inch Nor did he at any time go to our franchisor teaching, which is also required from new managers which are functioning our franchised business model, if ever the owner is not involved in the day-to-day operations.
That really doesn’t happen during franchising, and although franchising is an extremely successful business structure for distributing goods, assistance, and products; it isn’t Disneyland. I doubt any organization really is.
I explained to him the fact that he had to run the business an unusual way, and he stated that I was wrong, simply because he didn’t sign any agreement, and he was going to do it his way. Wow great I thought, right now I have a rogue franchisee on my hands, and they’re not keeping with the regularity of our brand name.
You see, in the franchise deal there are stipulations before you transfer the business to someone else, the popular franchisee has to then signal the latest franchise agreement, and in addition they have to be approved by the franchisor. It turned out the brother-in-law was not running the business per our confidential operations instructions, he had made quite a few shifts.