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To be a former franchisor, and needing franchised my company to get over 10 years before I just sold it, it seems in my opinion that I’d experienced you can find possible scenario. Most people believe franchising is really cut and dry; you have a team agreement, people pay most people a certain amount to purchase their franchised outlet, and then they get the job done the business or store to get a 10 year term with automatic renewals.
One day, I appeared to fill in for one our area representatives in that vicinity, and I went to go to the franchisee on the Georgia aspect. When I got there, I actually was talking to his brother-in-law. Apparently he was right now running the business, and your franchisee had transferred this company to him without agreement.
Let me give you a good example of a crazy thing that happened to us. We had a franchisee who lived 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 was in there were different rules and regulations on each side with the border.
This is a serious issue, and it happens again than people realize. Franchisors need to demand that the the right procedures are followed, otherwise you run into all sorts of scenarios. Please consider all this and think on.
You see, in the franchise binding agreement there are stipulations before you switch the business to someone else, the fresh 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 adjustments.
Worse, he wasn’t following the proper techniques which were part of a large fleet account we had with a domestic company. Again because he didn’t have to follow will be confidential operations manual, that he never read simply because as he said; “I never signed nothing. ” Nor did he truly go to our franchisor training, which is also required of new managers which are functioning our franchised business model, in the event the owner is not involved in the day-to-day operations.
I explained to him that he had to run the business an unusual way, and he proclaimed that I was wrong, because he didn’t sign any agreement, and he would do it his way. Also great I thought, right now I have a rogue franchisee on my hands, plus they are not keeping with the consistency of our brand name.
That really doesn’t happen for franchising, and although franchising is an extremely successful business model for distributing goods, solutions, and products; it isn’t Disneyland. I doubt any online business really is.
Yes, the fact that sounds like a decent business model, however nothing is ever as basic 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 correctly; where the franchisee qualified for the loans very quickly, had a perfect resume, had a wonderful location, didn’t care to help you negotiate any terms with the franchise agreement, and all sorts of things went perfect during the decade they were in business prior to renewal.