Good for you, John! I won’t have time to make it through a whole report, but I just wanted to say two things: If this’ll save more than a few from Franchise Hell, it’ll all have been worth it.
And I think @DefinitelyNotAPuroCleanExecutive was hilarious.
FuckFuckFuckFuckFuckFuckityFuckFuckFuck.
Had my first consultation today.
I sent out messages via FB/Messenger to people who recently expressed a need to have someone review their Franchise Disclosure. 2 responded, one needed something today given he was due to sign the franchise agreement on Wednesday.
Call begins, it’s him and his wife on the phone. I ask if there are any other stakeholders who should be on the call (I asked him this earlier as well) and, not surprisingly, just those two were needed. He is a regional big wig of a hardware chain most of us had heard of, buying the franchise is his idea, but she was the one who wanted the call: she liked that I billed myself as skeptical.
First question is simple: “What do you want out of this call? What would make you think value was received? What questions do you need answering?” And, in the end, they wanted to know if this specific franchise was a good opportunity. Then I asked them to envision where they want to be in five, ten years… and he wants to run 5, 10, 15 units, kind of like he is doing now for Big Corporate. He doesn’t want to run a store, he wants to run 10 of them and pay other people to run the stores.
A few more questions along those lines and then we reviewed the disclosure document together, they following along, one of them typing the entire time. And, long story short, he was stunned to find out that what he thought he was buying into was not what he was buying into, and that this specific franchise was, in no way, going to help him achieve his goals. In the end, she summarized the franchise as “Amway, but with a truck and credit risk”, which is apt given that you, the franchisee, are responsible for personally financing your customers credit for their purchases.
Anyway, they were leaning towards signing on Wednesday and, well, now they are not. $300k and 10 years, saved!
That sounds like a freaking nightmare. 
I have a little experience with that kind of business, but I refused to dive totally down the rabbit hole.
Are you making money from this? (I mean, you certainly should be, but are you?)
Yes… . .
Wonderful!
But watch your back. Big Franchise is going to put you on a hit list if you keep this up 
Indeed.
It’s all fun and games until the first Cease and Desist letter comes down…
Congratulations!
I wonder if, twenty years from now, we’ll have TV/radio/internet ads dedicated to “getting you out of your franchise agreement”. And offices full of lawyers who do nothing else. Like they have for timeshare exits today.
~Max
This week’s episode of John Oliver had a long piece about trucking. It rehashed some of the stuff that had been discussed in the Nahployment thread and other threads. Mostly that in the game between transport companies, government regulations, and shippers, it’s the drivers who get squeezed.
What prompts my post here is that the lease to own and other practices reminded me of the type of franchise agreements discussed in this thread. It is setup so that it is almost impossible for drivers to win. No matter how hard they work, the money always goes to somebody else. They talk to one woman who had $150,000 in revenue, but only $20,000 (or so, maybe $30k) in income. That $30k was working as many hours per week as possible.
A driver is told they will be their own boss, own their own business, etc. Instead they are committed to a lease/loan on a truck and are often forced to get maintenance from company shops (that last bit came from a podcast, not the show, if I remember correctly). If they default on the lease, they loose all of their equity in the truck.
Decided to get on Facebook today, talk to some potential franchisees… and was called ‘dangerous’ for my advice, lol.
Someone is big mad at me. First, the question:
I note that this 6 year old company had 16 units and wasn’t in business long enough to even have one franchise go the full 10 years. Then I add:
She asks why, I thought that about this franchise, to which I said:
(ETA: sorry for the duplicated paragraph)
She was glad, a bit, for the advice. A little confused at my lack of positivity, though.
And then this guy shows up, lol, and he is not happy:
Well, allow me to retort!
He might be in charge of the Facebook group I was in, so I may not be welcome for much longer 
.
Good work!
I’m reviving this thread after John Oliver’s featured story about franchises (specifically, Subway franchises) from May 22, 2022.
And what was the essence of his story for those of us not willing to watch the entire thing?
Don’t buy a Subway franchise. The company doesn’t support their franchisees and even works against them.
No exclusivity at all. They will sell a franchise right next door to your own shop and there is nothing you can do about it.
‘Powerbangs’ was a funny comment. Lovely woman too.
Long time neighbor of mine is a serial entrepreneur and went into Subway franchises for many years. His family started off owning a few real small country convenience stores, the kind that mostly got run out of business when the big convenience store conglomerates started to lay down roots. He sold those businesses off and started investing in Subway franchises in the late 1980s, and owned as many as 6 through the 90s and early 00s. He ended up selling out of all of them around then for exactly the reason mentioned–Subway is pretty bad toward existing franchisees. A big attraction of Subway is the per franchise startup costs were very, very low (especially in the 80s), their real estate foot print could be minimal, you didn’t need as much expensive restaurant equipment as many places (because they didn’t really cook stuff on demand, they baked bread and cookies and made sandwiches–they added their convection toasters near the end of his franchising.)
While a McDonald’s all in with real estate was often setting franchisees back $1m or more per location even in the 1990s, Subway franchises could be had for as low as $100,000, end even less in the late 1980s. The net income from one franchise was often described as “buying yourself a middle-class job”, because owning one restaurant your net profit would be about the same as a typical middle-class wage. You could work yourself into decent money by doing what my friend did, which was franchise multiple stores.
He was already seeing Subway get way too aggressive with new stores and cutting into his customer base, and decided to get out of it–all indicators are they are even worse now.
I read a long article about an interesting practice Subway uses too, for quality control of their restaurants they have a team of “Subway Inspectors”, who show up for monthly store inspections to make sure the restaurants are meeting corporate guidelines. You might imagine these inspectors would be employed by the main Subway corp, but this is not true. Instead, each large region of the United States has a “primary” franchisee who is also in charge of running the store inspections for all stores in their region, this is typically the largest multi-store franchisee in each region. Interestingly this means the big dog in each region gets to basically inspect his competitor’s store, and levy violations against them.
While my friend was lucky and didn’t have many beefs with the franchisee who ran his inspections, there was an infamous story I think out in California where the big regional franchisee had his inspectors repeatedly fail other franchisees in the region. Enough inspection failures you end up in Subway “court” which is binding arbitration where you can end up basically having your franchise license and business ripped out from under you–and the primary regional franchisee gets first dibs on buying it. The California franchisee made it a habit to violate as many of his competitors as possible out of their franchisees and then basically buy their stores out.
I am getting satellite radio ads for NuSpine chiropractic franchises. Even if I was interested in making money from a field that’s heavily composed of quackery, this outfit’s come-on would give me pause.
The claimed initial investment is between about $207K and $377K to get the doors open, after which you’re paying the salaries of 2-4 staff, possibly including a chiro if you’re not already one, plus advertising, rent, utilities and other ongoing expenses. Claimed gross revenue for a sample location is $459K in one recent year. It doesn’t sound like you could recoup your investment anytime soon, if ever.
They offer secrets to chiro success.
“…patients in today’s world desire an experience. They want fun over boring. They want exciting over stale. They want a place they can be excited to tell people about.”
Let’s go get our necks and backs cracked. It’ll be FUN!
*the head honcho’s home clinic boasts that it offers the “Best Crack In Town”. With catchy slogans like that, you could be wealthy beyond your wildest dreams.
Thanks, @NDP, for bringing that to this discussion. Subway is pretty bad, but to be honest, nothing Oliver said was out of the ordinary for many franchises.
Gotta be frank: Oliver pulled his punches. I don’t think he really understands the full amount of the exploitation which goes on here, and I found the Korean melodrama to be… bizarre. Otherwise, yeah, he did what I do- read these damn disclosures and get agog at the shameless obfuscations.
However, did not know about the “Subway Inspectors”, which is a special sort of scummy for this scummy industry.