I have seen a few threads on here mentioned about franchised businesses.
I will give a very brief run down of my experience. I won’t mention the brand name for obvious reasons.
My due diligence with this franchise started back in 2004. I spent months talking to other partners who had purchased into these stores. All the usual questions about the Franchisor and there own store where scrutinized as you can imagined. My application was sent in, I went through the interview/screening process and I was offered a site.
During the interview process I was told:
This site will cost 270k (Sites averaged around 300k)
The store will be opening in 5 weeks so you will be required to start training immediately if you accept.
You will receive 3 quotes from shop fitters for you to sign and accept.
I accepted the site and quit my job as training was staring the following week.
However the store did not open for a further 3 months. The store ended up costing 480k not 270k. I never received any quotes, just invoices. As you can imagine this has a dramatic change to your business plan.
There recruitment and design team were untouchable about questions about the store costs. They new my financial details and my business plan, what I could borrow etc but this does not matter after you have signed and the franchise agreement.
ANZ who I had financed through even contacted the Franchisor to find out why this site had cost so much as they had financed some other sites.
I tried to manage this store while going back to work as my funds and capital where pretty well dried up. Prior to the store opening I had many questions that remained unanswered and I new I had just boarded a sinking ship. For 2 years I tried to bucket out this seeping water until I was instructed to sell by my finance institution.
I had found a potential buyer for a fire sale price of 190k, however the Franchisor had never entered a legal binding lease on the subject premises and the potential buyer walked.
The Franchisor offered me $90,000. I accepted. By this stage I was shipwrecked. I had hit the bottle, I was drained. I had nothing left. I was physically, finically and emotionally drained
In a franchise you normally have an area manager, a state operations manager, and at the top the national operations manager. This is some of the recorded telephone conversations I had with national operations manager:
“Your store costs weren't reviewed.”
“The whole episode has definitely been a learning experience for everybody; your store was built at a time when just f*&*ing get it done. We were concentrating more on getting the brand name out there”
“How do we justify anybody paying over $400,000 for a store and expect them to get a return? Morally as a company we should have a look at this as well.”
I even have a recorded conversation of this franchise consultant admitting that he had heard of the recruitment team being dishonest.
This is just my experience with a franchised system. There are some good quality Franchises out there. Even with the brand I was associated with, there are good quality sites. This was my first experience entering into a business and a very steep learning curve and financially draining.
I will give a very brief run down of my experience. I won’t mention the brand name for obvious reasons.
My due diligence with this franchise started back in 2004. I spent months talking to other partners who had purchased into these stores. All the usual questions about the Franchisor and there own store where scrutinized as you can imagined. My application was sent in, I went through the interview/screening process and I was offered a site.
During the interview process I was told:
This site will cost 270k (Sites averaged around 300k)
The store will be opening in 5 weeks so you will be required to start training immediately if you accept.
You will receive 3 quotes from shop fitters for you to sign and accept.
I accepted the site and quit my job as training was staring the following week.
However the store did not open for a further 3 months. The store ended up costing 480k not 270k. I never received any quotes, just invoices. As you can imagine this has a dramatic change to your business plan.
There recruitment and design team were untouchable about questions about the store costs. They new my financial details and my business plan, what I could borrow etc but this does not matter after you have signed and the franchise agreement.
ANZ who I had financed through even contacted the Franchisor to find out why this site had cost so much as they had financed some other sites.
I tried to manage this store while going back to work as my funds and capital where pretty well dried up. Prior to the store opening I had many questions that remained unanswered and I new I had just boarded a sinking ship. For 2 years I tried to bucket out this seeping water until I was instructed to sell by my finance institution.
I had found a potential buyer for a fire sale price of 190k, however the Franchisor had never entered a legal binding lease on the subject premises and the potential buyer walked.
The Franchisor offered me $90,000. I accepted. By this stage I was shipwrecked. I had hit the bottle, I was drained. I had nothing left. I was physically, finically and emotionally drained
In a franchise you normally have an area manager, a state operations manager, and at the top the national operations manager. This is some of the recorded telephone conversations I had with national operations manager:
“Your store costs weren't reviewed.”
“The whole episode has definitely been a learning experience for everybody; your store was built at a time when just f*&*ing get it done. We were concentrating more on getting the brand name out there”
“How do we justify anybody paying over $400,000 for a store and expect them to get a return? Morally as a company we should have a look at this as well.”
I even have a recorded conversation of this franchise consultant admitting that he had heard of the recruitment team being dishonest.
This is just my experience with a franchised system. There are some good quality Franchises out there. Even with the brand I was associated with, there are good quality sites. This was my first experience entering into a business and a very steep learning curve and financially draining.
