Franchising What are some of the worst Franchises ??

Your second assertion sounds like a less worse outcome, not withstanding @geoffw 's observation regarding a franchisee fiddling profits.

Or, say, given the fiddles are the same old stuff all the time... cash refunds for items subsequently written off at stocktake, personal credit card purchase "reimbursements", petty cash reconciliations containing fictional tax invoices, non-business purchases entered as "inventory", related party "consultancy" fees, and "rent" of related party premises, etc.

A franchisor would not do well to not develop some KPIs for their "partners" to curb any imagination problems that might creep into the franchisees' business processes.

 

Report – Parliament of Australia

Anyone read the report? I've semi-read it so far, but can see that it raises many issues which have already been discussed in this thread.

 

Exactly. If the franchisee over orders stock that spoils, or has too many staff on, or as you said, takes any of the profits home in the form of stock , then the profit to the franchisor could be eliminated.

So both theories suck for one party, but what would a good solution be?

 

Sounds like a 50-50 split might be the order of the day.

Although if the franchisee is over-ordering stock there should already be KPIs in place that flag orders vs turnover (although a little more difficult in the ragtrade and toys where indent orders are much more prevalent..), and wastage rates as a % of stock holding, and cashup "shortages", which would attract much more franchisor attention and store-level <cough> assistance...

 

https://www.theage.com.au/business/...over-expiry-date-outrage-20190502-p51jlv.html


What an absolute mess

I reckon I'd never buy anything from the rfg group any more

 

Gawd. Management has really destroyed the reputations of any of their franchises

 

This one gets the most and worst coverage

Makes me wonder if other franchises are just as bad or they are just a bad egg

 

And not a food franchise for a change

https://www.theage.com.au/business/...hool-franchise-collapses-20190521-p51pj0.html

feel sorry for those that have lost heaps, especially that woman thats lost $265k and doesnt even have a working site

 

I'm trying to recall if I have ever seen a good client franchise. I have heard loads of bad stories. One common factor:

They bought a job in a very low margin / higher turnover business that requires 60+ hours a week to have the doors open in rented premises. And its largely unskilled work involving buying stuff to resell. It was evident in every case that projected numbers were not sound and based on turnover incl GST and ignored staffing for the 60hours (or 120hrs for 2 people etc). Business overheads are poorly detailed in most cases too. eg power, rent, advertising etc.

I looked at investing in an apparently well run large cafe. With a view to franchise it. Assured of profitable trading I delved deeper and in just several hours it stunk like a sewer. All the wrong answers (lies) to the right questions, I walked away. The sales pitch was abundant profit which I would love to have proved. Reality was the opposite. I could see the unpaid supplier accounts getting larger. Then some suppliers changed..They didnt want to show me the ATO account for the BAS. I insisted. It showed a rising debt. It showed massive cash payments for wages - a risk for the employer (they admitted they paid cash to avoid paying full rates). Profitable businesses pay their debts and dont do this.

One glaring concern is that we often encounter people who have signed up without second opinions. "Hey its a well known pizza franchise - You will make millions like Fred here who has three stores". And Fred has a very different deal. And he keeps his deal by acting as bait. Maybe even a related party. And then you are told you must sell pizzas for $5 each. On a weekend.

Dont sign a thing without paying for good advice. It will pay for itself multiple times over.

 

I have some insight into this one... the franchisor didn't keep proper books and thus got in trouble with the ATO, and the ATO issued garnishee notices to all the franchisees. This placed those franchisees in violation of their lease agreements, their mortgage/business loan agreements, etc - and was due to no fault on the part of the franchisees. A lot of very unhappy franchisees. Oliver Brown set to emerge from voluntary administration - SmartCompany

 

At that point the agreements etc are all worthless anyway and the DOCA reflects this. The administrator etc and the DOCA with creditors treats all parties including the franchisees as creditors. The ATO are just using their muscle to ensure franchisees dont benefit to the ATO detriment in the meantime. In reality they wont. Nobody wins.

 

https://www.theage.com.au/business/...chel-s-owner-fights-back-20190614-p51xv1.html
This will be interesting.
Does she have any chance?

 

I read that the class action against Dominos across Australia is alleging that (like 7/11) you can't make a profit in that business WITHOUT underpaying and exploiting staff.

I must say I've been a bit suspicious of Dominoes for some time, there's a large one at my local shopping centre and all the workers including management appear to be from one particular ethnic group, no Australians or other sorts of migrants whatsoever. You do wonder whether they only employ their own because they know its less likely their workers will complain about being underpaid?

 

one thing i assume, is that the dominoes I go to, none of he owners seem to be working there ever, if they were struggling, the owner usually is there

(am assuming all the 20s kids working there arent the owners)

 

Iconic Hog’s Breath chain rocked by string of closures

Looks like hogs breath is next