To be a former franchisor, and developing franchised my company designed for over 10 years before We sold it, it seems in my opinion that I’d experienced you can find possible scenario. Most people think that franchising is really cut and dry; you have a operation agreement, people pay most people a certain amount to purchase their franchised outlet, and then they operate the business or store for any 10 year term by means of automatic renewals.
Let me give you a good example of a crazy thing the fact that happened to us. We a franchisee who enjoyed on the border of Ga and Alabama. We allowed them to have a joint sales area in both states. With the type of industry we participated in there were different rules on each side in the border.
Yes, the fact that sounds like a decent business model, nonetheless nothing is ever as straightforward as it appears in the franchising industry. Let me explain. Progressively, I don’t think I ever endured a perfect franchise sale when everything went exactly correctly; where the franchisee qualified meant for the loans very quickly, had a perfect resume, had a superb location, didn’t care to help you negotiate any terms of the franchise agreement, and every thing went perfect during the 10 years they were in business prior to renewal.
This is a serious concern, and it happens more often than people realize. Franchisors need to demand that the appropriate procedures are followed, otherwise you run into all sorts of situations. Please consider all this and think on.
I explained to him who he had to run the business an unusual way, and he stated that I was wrong, simply because he didn’t sign any kind of agreement, and he was going to do it his way. Also great I thought, today I have a rogue franchisee on my hands, plus they are not keeping with the regularity of our brand name.
One day, I materialized to fill in for one your area representatives in that section, and I went to go to the franchisee on the Georgia part. When I got there, I actually was talking to his brother-in-law. Apparently he was now running the business, and some of our franchisee had transferred the business to him without authorization.
That really doesn’t happen during franchising, and although franchising is an extremely successful business structure for distributing goods, solutions, and products; it isn’t Disneyland. I doubt any industry really is.
You see, in the franchise deal there are stipulations before you switch the business to someone else, the new franchisee has to then hint the latest franchise agreement, and they have to be approved by the franchisor. It turned out the brother-in-law was not running the business much like our confidential operations manual, he had made quite a few changes.
Worse, the guy wasn’t following the proper procedures which were part of a large fleet account we had with a indigenous company. Again because he didn’t have to follow will be confidential operations manual, that he never read since as he said; “I never signed nothing. inch Nor did he at any time go to our franchisor workout, which is also required in new managers which are functioning our franchised business model, in the event the owner is not involved in the day-to-day operations.