When mitigation companies talk about providing flood remediation, I’m pretty sure they really mean any water damage at all, not just flooding. I know the vast majority of claims I worked on in my area were from plumbing supply failures, especially toilet and sink supply lines. Actual flooding was very rare here and unfortunately often not covered by insurance.
The franchise I worked for routinely did several million dollars worth of business in an area much smaller than San Antonio.
Nevermind, caught the ETA…
But we already have that, they are called lawyers. If you are signing a contract that’s costing you $250 thousand dollars, spend what’s necessary to get the contract looked over.
How did the government leave them hanging? I thought we were talking about retired veterans? The one mentioned in the news story served 33 years.
There’s nothing at stake in a Windows EULA. Not even close to signing a franchise contract.
That’s why you have a lawyer. You are already thinking of putting up a couple hundred thousand, spend a couple thousand on a lawyer first.
Again, lawyer. When I buy a house, I don’t take the advice of the people selling the house. I have the house independently inspected so I know that it has no foreseeable problems and have the contract looked over by a lawyer.
I can’t think of any reason military vets would be more likely to sign off on this than anyone else. The fact that they may be targeting military may even just be because military may be more likely to bring their friends in on it.
Sure, and again, hire a lawyer. Anyone that signs a business contract without having their own lawyer look at it is just, we’ll say not a good candidate for owning a business.
Absolutely, and it’s not just restaurants. It’s not like they lost their home in a fire, they made a series of bad decisions.
And that’s entirely on the franchisee. It’s like being charged with a crime and asking the DA for legal advice. These are adults here, having a contract looked over is Business 101.
What kind of flooding is included in that? The majority of flood work is busted water lines or a water heater that leaked and ruined your flooring/ceilings. Otherwise flood repair places would only be open in spring.
You’ll live to regret asking for that. 
These actually tie together in my experience, so will respond to both.
To your point, @MandaJo, I come from a family of entrepreneurs, both mother and fathers side. My ex-wife did not. I can just recreate the conversation right now when I told her about my first business:
“I’m going to start my own business.”
“OMG. What if you fail? What if we lose everything?”
“Well, you just pick up the pieces, learn your lessons, and then start another. Right?”
“Your family is insane.”
Because some businesses work, some don’t, and they work for reasons that involve both you and those forces you can’t control. My Dad started an executive recruitment company in 1977, right at the time the American economy was entering the ‘malaise’ phase of the 1970s, it failed, and then he started a phone book delivery company in 1984 which was pulling in millions in profits by the mid-1990s. And then it failed because of smart phones.
To your point, this is the environment I grew up in and your explanation is as good as any for my wife’s, at the time, completely puzzling (to me) reaction. This was just how life was to me: You go to school, get some experience, and then start a series of businesses until one sticks. My grandfather (after retirement), uncle, father, stepmother, sister, etc, all followed this model. To my ex-wife, growing up in a family of salesmen and long-term corporate career types, just ‘winging it’ like this was completely beyond her ken.
Which is why, @filmore, I was literally in a conversation with my uncle about your exact point 40 years ago. We were at a pizza place and, chatting with the guy making the pizza, we learned he was also the owner of the place and had it for 10 years. My uncle was a man who never passed up a chance to criticize but that didn’t mean he was wrong in the general sense a lot of times. And when we left he said “this place is going to fail.” And I asked him why and, reading your post, his words came to mind:
“Too many people start restaurants because they make a specific dish very well, or they were a kitchen manager who thought they could do better than they guy they worked for. But running a kitchen is a completely different job than running a restaurant, which itself is a completely different job than running a restaurant business. And they all require completely different skill sets and it is very, very rare to find a person who can do all three.”
I’m pretty sure the place did fail, it was just a small pizza place in Daytona Beach and it’s lifespan was measured in its owners interest in keeping it a going concern.
To both of your points, running a successful business is more than merely running the location, or being really good at water remediation services, or whatever. Even if my friends had succeeded, they would have spent a million dollars to buy a well-paying job. And they could have had one of those for free.
Around here, most of the flood damage remediation places also do fire damage remediation, so that’d increase the amount of money available in the pool. But it still seems awfully implausible to support that many businesses.
A couple of years ago, I had a high-school student who had no interest at all in learning math, nor (I gather) anything else in school. I asked him what his plan was for his life, so I could show him how math would be important for it. His plan? To own his own business. Aha, but surely you’ll need math to run a business? No, no, you see, he wasn’t going to run the business, just own it. He’d hire other people to run it for him. But why would these people work for him, instead of setting up their own business without him? Well, of course, they’d need him because he’d be the owner. I just couldn’t get through to him just how flawed this plan of his was.
I think now that I see a vision of that kid’s future.
Going to push back a bit on this - make sure you select the right lawyer. There is a difference between reading an agreement, verifying it is in the proper legal form, vs understanding the underlying business model within. You’re asking a lawyer to review a 300 word document formatted even more poorly than the OP… what’s he going to review in the 2-4 hours he’s billing you for this?
If I had one piece of advice for budding franchisees, it would be this:
If you buy a single franchise, you are most likely buying a job. If you buy three or more, you’re most likely buying a business.
Now this is my preference, I get that. But if you start a business with zero expectation of cashing out, where you have to come in every day and smile at your customers, you have effectively bought a job, even if you net $150k (salary + profits) a year as an owner-operator of your Marble Slab Creamery.
On the other hand, if you buy three (or more) franchises, then the businesses should spin off enough cash that you can hire managers, let other people do the actual work, and you just pop in every so often making sure the cash generation machine is still working while thinking about other investment opportunities.
The second lifestyle is far more preferable! Let other people be customer facing, lol.
I understand that. That was, in fact, the whole point of bringing it up. I was pointing out that even something as trivial as a Windows update comes with a convoluted legal agreement, which has conditioned a lot of people to just expect that legal agreements are going to be convoluted, and to just sign them. That’s not a good thing, but it’s a contributing factor to why some people sign objectively bad contracts without really understanding them.
Well, yes, of course. I don’t think I or anyone else in this thread is saying that’s bad advice. Of course you should consult with an objective, outside third party, like a lawyer with franchise contract experience that you select, to review the contract.
But your comments seem to have an implication that if somebody signs a bad contract, it’s entirely their fault for not doing the due diligence you would do, and the franchise is blameless for predatory sales practices and deceptively structured and written contracts.
Again, all sorts of people fall for all sorts of scams all the time. You can say “They should know better” all you want, but I think it’s pretty clearly and thoroughly established that human nature doesn’t always abide by your preferred best practices.
I can think of a few.
Keep in mind, this sort of thing isn’t really targeting vets in general, it’s targeting recently retired vets. After 20 years on Active Duty, they’ve got some savings, a pension, VA health care, and other benefits. But they’re still too young to really retire (someone can enlist at 18 and retire at 38 with full benefits), and the pension by itself isn’t enough to live on.
But it is enough to give them a significant financial cushion, and to make them feel secure in taking a financial risk and accepting a few years to scrimping by to build their franchise. After 20 years of enlistment contracts, they’re used to long-term contracts with, on the surface, even more onerous terms. They’re used to long hours and hard work. They’re used to delayed gratification. They’re used to structured work and SOPs. They’re used to an environment where if you put in your time and make an honest effort, you’ll be rewarded.
Franchises like @JohnT’s example don’t offer them a get-rich-quick scheme. They offer them a chance to become their own boss while still being in a structured, SOP-driven environment, to put in some hard, honest work, and to build towards financial independence and security in a reasonable timeframe. After 20 years enlisted, a 10-year contract may actually seem like a relatively short time commitment. They’re also used to, not coincidentally, signing multi-year contractual commitments without consulting outside counsel.
And, just to reiterate, of course they should consult with an outside lawyer before signing a contract like this. There are a lot of “shoulds” in the world. Not everyone always does what they “should” do. That doesn’t mean that it’s just their own damn fault for not being an adult, and that the predatory franchiser doesn’t have any moral culpability. It does often mean that the franchiser doesn’t have any legal culpability, though.
ETA: And as @JohnT points out in his most recent post, just above this one, even consulting a lawyer doesn’t necessarily help all that much. Even a lawyer with experience with contract law may not realize just how bad the business model is for the franchisee.
I understand your general point - but it seems like 10 years isn’t a bad run for a business. It looks like that is what your dad got out of his phone book delivery one (of course, I doubt the pizza guy had millions in profits). Even if it is closed now, he made of sold it to someone else with a pizza dream. One friend bought a Baskin-Robbins from someone looking to retire, ran it for sometime (might even have been 10 years), tired of it and sold it on to someone else.
It wasn’t his full-time job, and even at that he would gripe off and on about what a PITA it was.
True, and to your point, if the man was happy he was happy. Not every business needs to expand.
But note he did this outside of the franchise system, which is the subject of this thread. (My fault for bringing in a non-franchise example).
He may have ‘had a job’ (in my words) but he didn’t pay hundreds of thousands upfront for it via an agreement so complicated even States don’t regulate them.
They willingly signed a contract they didn’t understand with no due diligence. And these are not kids. What should we do, appoint a guardian for them full time? It may be predatory, but I’m having a hard time seeing how if everything they need to know is in the contract. That’s why you hire a lawyer, they can explain the contract to you. They can even dumb it down to “don’t sign it” if it comes to that. If you are willing to risk your life savings on a business you should be willing to risk a couple thousand on a lawyer.
You keep saying that as if anyone is disagreeing with you on the “should”. No one is. I’ve repeatedly agreed with you on the “should”.
Then re-read @JohnT’s excellent OP. The contract itself and the business model are both deceptively structured to deliberately obscure the franchisee’s actual costs and obligations, and to ensure that the franchiser makes money off of them coming and going. It’s an objectively terrible deal for the franchisee, but it’s difficult to see that if you don’t do the kind of analysis @JohnT did.
And, yes, I know, that’s why someone should talk to a lawyer first. But 1) it’s a simple fact that people don’t always do what they should, 2) even a lawyer may not catch the predatory way the business model is structured, and 3) Pur-O-Clean seems to be literally banking on that, and 4) Pur-O-Clean “should” know better than to pitch franchises to people who are so unsophisticated and unprepared to run one that they don’t even subject the franchise contract to due diligence and third party vetting, yet they seem to target precisely those people. That’s predatory behavior.
No, but maybe a post explaining their predatory behavior on a message board dedicated to fighting ignorance…
I think you are generally right to be outraged, and I tried to read the whole post thoroughly. That said, I think some of your interpretations and calculations are wrong. Such as payroll kickbacks. I would think the ADP % commission, for example, would be on ADP’s payroll processing FEES, not total gross payroll. That would be insane. I have a small business and I have used ADP though I switched last year. I pay around $100 a month in payroll fees. I’m thinking they might charge a higher rate to send PuroClean a commission, but charging 17% of a six figure paycheck? I really doubt it.
If you actually welcome editorial suggestions, I have some you can take or leave, according to what you’d like to accomplish. I don’t intend any harshness; you’ve done a fantastic amount of research and discerned the point of all the information you’ve gathered. Now it’s a question of knowing your audience and presenting your story in the most effective manner.
If this were indeed conceived of as a submission to Harper’s or a similar publication, you’d probably want to start with an intimate personal introduction of one of the adversely affected people, along the lines of (and of course I am making this shit up out of whole cloth):
It’s the second Thursday of the month, the day that Pamela sets aside to pay bills. A large stack of them, some sporting “overdue” stamps in big red letters, sit next to her coffee cup at the kitchen table. She shoos the cat off her chair, sips her coffee and starts sorting the bills into two piles, the ones that just can’t wait and those that can be set aside a little longer. She realizes she’ll need to tell her husband Frank, who is still asleep, that it’s time to sell their house. Fighting back tears, she looks around the kitchen and remembers how excited she was when they first moved in. It wasn’t supposed to end like this.
… Or anyway, something personal like that to draw the reader into the story. I know, my version is probably maudlin and sucks, but I didn’t say I could WRITE, just that I could edit.
And of course, all that breezy “I’ve don’t the math for you,” and “I will quote from [a document] quite a bit” should go. It’s a pretty good starting rule to leave yourself completely out of the story except insofar as you are drawing the reader in by helping THEM to feel the experience, for example:
RIGHT WAY FOR THE AUTHOR TO PLACE THEMSELF IN THE STORY:
I arrived at Jeff’s house - a dilapidated brownstone with a bare lawn - early, but he was already sitting on the porch, ready to welcome me. He ushered me inside with a gap-toothed grin.
WRONG WAY: Now, I’ll tell you the five things the prisoner told me. I’m going by memory so I may forget a little of what I was told, but they wouldn’t let me have a pen and paper in the visitors’ room.
Also, I’d skip the “definition of terms” at the beginning. Anyone smart enough to stick with your article and make sense of the information knows the difference between a franchisor and a franchisee.
Lastly, this bears further exploration: this story is replicated hundreds, thousands of times every year. To write a more complete piece of investigative journalism, we need to know more: just how many franchises does PuroClean sell a year? How many stay in business and how many go under? If you can’t get those numbers, you at least need to try (here’s where the author legitimately inserts themselves into the story: “I called PuroClean headquarters multiple times, but they refused to divulge any information about their annual revenue or the performance of their franchisees.”)
Finally, a balanced article will try to find that ONE person who actually has a successful PuroClean business, and talk to them - let them speak for themselves as to how they made a success of the business. Then you can contrast the advantages that that person had with the majority of franchisees.
That’s my two cents, feel free to ignore.
… what? Did someone say something?
In all seriousness, thank you.
By the way, and this may be a practice only limited to the man whose lecture I saw, but he did mention that most franchisers limit you to a 21 day review period of the financial disclosure document.
I think this is an important point for @mordecaiB to ponder on: lawyers are not god-like fonts of knowledge. I’m lucky enough to have a pretty good lawyer as a brother, and he has pointed me to lawyers he knows with specific area knowledge for questions I’ve had.
If I’m the average schmo the predatory guys are targeting, even if I don’t get so carried away that I sign up at the meeting, there is no guarantee that any lawyer I hire is going to know how to read thru the document for financial pitfalls (c.f. the UltraVires thread elsewhere in this forum).
Solid article, and many thanks. I wonder if one difference between this franchise and McDonald’s is McDonald’s doesn’t just rely on exploiting the franchisee; it also relies on the franchisee exploiting employees. That could mean it does not need to squeeze franchisees so hard.
As Tony Soprano put (as did Karl Marx, but it took him 3 volumes of Capital and 3 volumes of Theories of Surplus Value) “This thing’s a pyramid since time immemorial–shit runs downhill, money goes up. It’s that simple.” Also Tony: “This is a business. Did you hear what I said?”
Is there a current list of best and worst franchises available?
Depends on whether you’re selling or buying a franchise I would guess.
Enjoying this discussion and wagering awaiting the answer.
Best and/or worst to buy.