“They’re telling me that I’ve got to make all these promises to them. As a franchisee, I have to operate the business according to their expectations, and in return they’re promising to do very little for me. How does that make sense?”
Isabel is back!
Yep, it’s Isabel again. On a rampage again, too. I love it when she’s angry because she pushes me right to the edge. Much better than dealing with a client who is afraid to challenge the franchisor; or a franchisee who’s afraid to ask difficult questions.
All those promises
Isabel had just read Item 9 — Franchisee’s Obligations — in the Franchise Disclosure Document (FDD) given to her by a franchisor. “It’s several pages long!” she complained. “They not only tell me when I have to open and close the business, but what I have to wear as a franchisee, how I have to act as a franchisee, how much advertising money I have to spend as a franchisee, and the volume that they expect me, the franchisee, to produce every year! Not only that, they put restrictions on the products and services that I can sell!” (The latter referring to Item 8 of the FDD).
Isabel didn’t think it was fair. Especially not after reading Item 11 — Franchisor’s Assistance. “That section is about a paragraph long,” she shouted. “They don’t promise to do much of anything for the franchisee, but they certainly plan to keep me busy and keep my hands tied, too.”
“Not funny,” she admonished
When I laughed at her last comment Isabel didn’t appreciate it. “It’s not funny, John. I’m so close to buying this franchise, but I don’t understand why they are making it so lopsided. Don’t they want me to become a franchisee?”
I apologized, but then I got right to the point to give Isabel her money’s worth.
Getting the straight scoop early
“Look,” I said, “would you rather they tell you what’s expected of you as a franchisee after you buy the franchise?”
“Of course not,” she said. “I want to know upfront what’s expected of a franchisee. What promises do I need to make to them? What promises will they make to me?.”
“Well then, that’s what you got,” I continued. “They told you what you’re expected to do as a franchisee. And they expect these things of you — hopefully — because they know these requirements will help you build a successful business. I say ‘hopefully’ Isabel because not all franchises are created equal. Some of them don’t know what they’re doing. It’s your job to become a franchisee of one that does knows what they’re doing. In which case, they won’t have you jumping through hoops just for something to do as a franchisee.”
Franchisor doesn’t promise much
“Well from what I can judge,” she shot back, “they don’t do much. This franchisor doesn’t make any promises other than to train me and provide support and a few other things. However, when I talked to them about Item 11 they told me they’ll actually do more than they promise. I don’t know if I believe them.”
“I don’t blame you,” I said. “However, look at it from their point of view. If they make promises that they can’t keep — even through no fault of their own — what’s likely to happen?”
“They’ll get sued,” she said.
Under promise, over deliver
“Exactly! . . . Remember, once you’re a franchisee it’s important to them to keep you happy. But until then, it’s better to promise a little and then deliver a lot. ”
“Yea, well that’s what they told me they’ll do. But when I told them I want it in writing, they said that’s not going to happen.”
“It won’t,” I continued. “They’re not going to change their FDD just for you. But Isabel, I think you’re making too much of this.”
“How so?” she wondered, now in her cordial voice.
Do your homework
“Well, it’s no different than what we’ve talked about in the past. You don’t take anything the franchisor says at face value. You owe it to yourself to validate it before you become a franchisee. And how do you do that?”
“Ask the franchisees!”
“Very good,” I said. “You’re a terrific student.”
“So when I interview franchisees I’m going to ask them if the franchisor does more than they promise in Item 11. And I’m going to ask them if they think Item 9 expects too much of franchisees.”
It’s a business transaction
“Great! Good questions. You’re right on track, Iz. This is a business transaction. The FDD isn’t intended to make you feel warm and fuzzy. It’s the cold facts from the franchisor’s point of view. It’s your job now to find out if their point of view satisfies your expectations and your idea of what owning and operating a franchise is all about. If it doesn’t make sense, you’re not yet a franchisee, so you’re still in control. No one is going to force you to become a franchisee.”
“Thank you,” she said. “I’ll let you know what I discover.”
No doubt she will . . . and boisterously, too!
Read Previous Isabel Blogs
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Photo image by: Robert Snache – Spirithands.netTags: Isabel
This post was written by Dr. John Hayes