How to Avoid Franchise Fraud
From the Blue Mau Mau site, we learn about some excellent franchise due diligence:
It is obvious.First I would do the sniff test.
Take my time. Never listen to the Zor because they have their main interest at hand. Wait a year to get to know what the Zor's company is really about.
It like considering marrying someone that you do not know.
Signing a franchise agreement is a commitment. If the partner is bad and abusive you are stuck.
They make it difficult to divorce them.
If I had known what I know now I would have never married into the franchise concept. It is too one sided. In the beginning they only show you their good side. After you sign you have signed your life away.
Anything that is assoiciated with Quisno's or their former has been's would tell me never to do business with them.
Never, never invest in any franchise unless you know them to be ethical and are looking for you to be a success. (Like they said in the beginning if we are not a success they wouldn't be successful too.)
This is a lie.
They don't care if you succeed.
They are in the business of selling franchises and not making people successful.
They already have your money and they will proceed to say 'Next!' Any fitness concept is a bad investment.
There is just not enough people to support your business that are disciplined.
Franchise lawyers are very busy these days. That is why I know many people are hurting like me.
Our only hope is those that are hurt will fight and get the government to make new laws to protect the investor from all the lies bad zors tell us to entice us to sign.
The key is stop the people who are hurting people.
(Via Blue MauMau - Comments.)
Excellent observations, but is it just hindsight?
Is this just a bitter ex-franchisee who is now dumping on the entire system?
No.
There is a simple franchise due diligence test: review the franchisor's financial documents which have to filed or disclosed.
Find out how much the franchisor is making from:
a) rebates from the vendors;
b) construction build out costs;
c) franchise fees;
versus
d) royalties from the goods that the franchisee sell.
Never buy a franchise in which you are not confident that d) is the main source of the franchisor's profits -only if you are selling can they make money.
Read the UFOC or Disclosure Document to find out these figures.
Any questions about it: email me or ask in the comments.
