Franchises are a hot ticket in the US for many reasons. Appealing to first-time business owners especially, the franchise often allows you to open your own store but without so many unknown factors hanging over your head. If you are worried about how to find a location, how to set it up, and what to do overall, the corporate office should have you covered—and they may even send you to a training school as part of the whole deal. For all that they can offer you however, franchising companies expect something in return: cooperation. If you are working with an organized company, you may find that some of their expectations—and tactics—are more intimidating than the idea of being thrown into the business world on your own.
Some of the top franchises in the US today allow individuals to enter the realm of fast food, sandwich making, ice cream, hair care, and far more. While hard work is certainly part of the quotient, the profits can be very good when the businesses are managed wisely. And the top franchising companies have been at this game long enough to know exactly how to play the game and keep everyone in line. Quality, speed in service, and uniformity are usually at the top of the list for requirements from franchisees.
Here are five ways you might find yourself in trouble as a franchisee though:
Compliance problems – these issues can be wide-ranging. Most franchising companies will have representatives who come in regularly to check on the franchise locations and run down a check list. Franchisees should be well apprised of what is expected of them, and if they do not follow the rules for an extended amount of time, legal action could follow.
Delinquency in paying franchise fees – payment issues can land a franchisee in hot water fast. Many of the larger companies have computerized systems that calculate exactly what percentage is owed. Paying an agreed percentage or ‘royalties’ to corporate headquarters is part of the deal, and franchisees must budget those payments in, or deal with legal repercussions.
Lack of training for managers or other employees – these issues often occur when everyone is busy and there has not been time to send managers to agreed-upon venues for training. There may be concerns about the cost involved as well, or it might just be overlooked/ignored.
Too many complaints – no one wants to hear that customers have been calling or emailing the corporate office with complaints about their location; however, if this is the case, franchisees may be expected to deal with the unhappy patrons by offering free products or refunds. If the complaints continue to pile up, the corporate office may have to take serious action.
Failure to Update Locations – when you open a franchise, it may somehow escape you in the initial details that you will be expected to remodel your location at certain intervals. Not only might that seem like a gigantic hassle, but it can be extremely expensive too. This often leads to some legal issues between corporate offices and franchisees.
Do you have questions about purchasing a franchise or a business? Are you in the middle of a business dispute and require experienced representation? Call Shane Coons now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to review your case, answer your questions, and help you move forward with success.