Many business executive management teams have chosen franchising as a way to extend their brand name very rapidly into the marketplace. There are many significant reasons for doing this. One is to move a product into the marketplace using other people’s money and a network of dealers. In franchising you have more control over your dealers and what they sell due to the strictness of the franchising agreements. Plus there are royalty overrides on the amount of sales produced and this can be a significant benefit and monetary inflow helping your profitability.
Unfortunately, since the franchisee in your team member and dealer network is at risk with his own assets and capital occasionally they will become disgruntled, unprofitable or litigious. When this happens suddenly attorneys appear on the scene on behalf of the franchisee to attack your dealer network and your system. Generally franchisees have a tough time winning in lawsuits from Franchisors. However, this does not mean that litigation is not expensive in defending such lawsuits.
Most franchisees who is to Franchisors look for possible misrepresentations in the Uniform Franchise Offering Circulars or UFOCs. Since the UFOCs are a 250 page document there are occasionally errors or ambiguous data which is used by franchisee attorneys to exploit and the franchisee will claim they did not understand a particular clause in the franchise agreement. Although that should not be the concern of the franchise or often arbitrator held cases will indeed side with the franchisee and this can be problematic.
Now then, the franchisee wants all this information to SUE and hurt the franchisor, and if they hurt the franchise system and thus all their former franchisee friends? Before they were a team member and now they are a parasitic virus wanting to hurt the self-encapsulated unit of the franchise system. Have you ever considered that? I mean what is an International Terrorist to a Nation? What are they now to a franchise system? From a winners and losers standpoint or in the Colonel Boyd theory of Guerilla Warfare they are now the guerilla warriors fighting the Establishment. And to that point is that a worthy fight? What again is the best part of Valor? Discretion!
Nevertheless, the former franchisee of the system who is disgruntled can do a lot of damage to a franchise system and hurt the brand name. They will use all sorts of tactics including putting up negative postings on forums, negative web sites, damaging public-relations articles and lawsuits with no basis. It is hard to control these situations and it may be necessary to go on the offensive who is now trying to damage the franchise system. Please consider this a 2006.
Lance Winslow - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs/
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