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Like a former franchisor, and needing franchised my company for over 10 years before I sold it, it seems for me that I’d experienced just about every possible scenario. Most people think that franchising is really cut and dry; you have a business agreement, people pay you will a certain amount to purchase their franchised outlet, and then they use the business or store for the 10 year term by means of automatic renewals.
You see, in the franchise deal there are stipulations before you copy the business to someone else, the new franchisee has to then indicator 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 down to our confidential operations manual, he had made quite a few improvements.
One day, I occured to fill in for one of the area representatives in that location, and I went to visit the franchisee on the Georgia area. When I got there, I was talking to his brother-in-law. Apparently he was now running the business, and your franchisee had transferred the market to him without endorsement.
I explained to him which usually he had to run the business a particular way, and he said that I was wrong, considering he didn’t sign whatever agreement, and he would do it his way. Oh yeah great I thought, today I have a rogue franchisee on my hands, and maybe they are not keeping with the regularity of our brand name.
Worse, this individual wasn’t following the proper types of procedures which were part of a large navy account we had with a domestic company. Again because the person didn’t have to follow are confidential operations manual, which he never read since as he said; “I never signed nothing. ” Nor did he ever go to our franchisor workout, which is also required of new managers which are functioning our franchised business model, if the owner is not involved in the day-to-day operations.
Let me give you an illustration of this a crazy thing who happened to us. We’d a franchisee who resided on the border of Atlanta and Alabama. We allowed them to have a joint sales area in both states. As a result of type of industry we was in there were different foibles on each side for the border.
This is a serious concern, and it happens usually than people realize. Franchisors need to demand that the the right procedures are followed, also you run into all sorts of scenarios. Please consider all this and think on.
Yes, the fact that sounds like a decent business model, however nothing is ever as straight forward as it appears in the franchising industry. Let me explain. Over the years, I don’t think I ever had a perfect franchise sale when everything went exactly appropriately; where the franchisee qualified for the loans very quickly, experienced a perfect resume, had a superb location, didn’t care to 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.
That really doesn’t happen in franchising, and although franchising is an extremely successful business structure for distributing goods, services, and products; it isn’t Disneyland. I doubt any online business really is.