As a former franchisor, and developing franchised my company for over 10 years before We sold it, it seems opinion 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 most people a certain amount to purchase their franchised outlet, and then they use the business or store for any 10 year term by means of automatic renewals.
One day, I appeared to fill in for one of our area representatives in that region, and I went to go to the franchisee on the Georgia side. When I got there, We were talking to his brother-in-law. Apparently he was now running the business, and this franchisee had transferred the market to him without authorization.
Yes, the fact that sounds like a decent business model, nevertheless nothing is ever as straight forward as it appears in the franchising industry. Let me explain. Over time, I don’t think I ever had a perfect franchise sale the place everything went exactly properly; where the franchisee qualified for the loans very quickly, had a perfect resume, had a perfect location, didn’t care to help you negotiate any terms in the franchise agreement, and all sorts of things went perfect during the a decade’s they were in business prior to repair.
That really doesn’t happen with franchising, and although franchising is an extremely successful feature for distributing goods, offerings, and products; it isn’t Disneyland. I doubt any business really is.
Worse, the person wasn’t following the proper measures which were part of a large navy account we had with a domestic company. Again because this individual didn’t have to follow will be confidential operations manual, which inturn he never read considering as he said; “I never signed nothing. ” Nor did he at any time go to our franchisor teaching, which is also required in new managers which are going our franchised business model, in the event the owner is not involved in the day-to-day operations.
Let me give you a good example of a crazy thing that happened to us. We had a franchisee who resided on the border of Atlanta 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 and regulations on each side with the border.
This is a serious concern, and it happens usually than people realize. Franchisors need to demand that the correct procedures are followed, in any other case you run into all sorts of situations. Please consider all this and think on.
You see, in the franchise arrangement there are stipulations before you transfer the business to someone else, the brand new 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 as per our confidential operations guidebook, he had made quite a few improvements.
I explained to him the fact that he had to run the business a clear way, and he said that I was wrong, simply because he didn’t sign any agreement, and he would do it his way. Oh great I thought, now I have a rogue franchisee on my hands, plus they are not keeping with the regularity of our brand name.