Investing In A Franchise

In Australian there are a number of quality franchise systems that may be a great fit for people wanting to find a new life and invest in their own business to set up not just their retirement but allow them to pass on greater wealth to their children and grand-children.

The myths relating to franchising are many. Victims of disasters in Australian franchising are routinely churned into silence where new generations typically replace them to gain their education through hindsight.  There is no protection through the Trade Practice Act 1974 or the Franchising Code of Conduct.

Franchisees in dispute must travel through a gauntlet of contractual powers that typically leave them unable to afford civil action.  The ACCC have been ineffective and disinterested in pursuing franchising complaints where literally tens of thousands of Australian franchisees have suffered abusive treatment producing either substantial or total loss for franchisee investors.

Franchising puts everything at risk and not just the initial investment. When franchisees fail whether it be their fault or through no fault of their own, the franchise contract offers franchisors the ability to pursue the franchisee into long-term debt and/or bankruptcy.

While there are quality franchise systems in the Australian market they are in truth very rare.  Novice franchise investors have no way to wade through the myriad of ‘smoke and mirrors’ sales propaganda created by the franchising industry and most franchisors.

Decisions to sign franchise contracts are generally emotional decisions cultivated by sales people with promises of too-good-to-be-true lifestyle and profit return.

The level of an investigation into the investment worthiness of a franchise is far more complicated than what most advisors understand or what most publications suggest.  But it is critical that every aspect is investigated and objectively considered.

It begins with prospective franchisees understanding how the franchise and how franchising operates and whether the prospective franchisee will be a good fit.  It involves a financial investigation of the truthfulness of projected earnings and the franchisor’s history of dispute handling and franchisee turnover. It requires the assistance of an experienced franchising lawyer to thoroughly explain the implications and potential interpretations of the franchise contract and importantly, what happens at the end of the contract term. It incorporates an investigation into the potential of the individual location, staffing and local influences on business growth and profitability.  And much more …

Rarely do poorly considered franchising decisions create anything but a total change of life for the worse with outcomes that often irrevocably damage families and their future generations.

This blog is designed to assist franchise investors on where they can uncover the truth of franchising in Australia.  The blog links listed on this page represent highly recommended reading.

Pursuing A Complaint

Franchisees confronted by a franchisor who has breached the Franchising Code of Conduct [the ‘Code’] or the Trade Practice Act 1974 [the ‘Act’] should pursue a formal complaint process.

• Firstly; a word of advice.  Franchisees should begin to collect hard evidence as soon as possible. Face-to-face contact or telephone calls from representatives of the franchisor regarding any dispute should ensure the content of that contact is confirmed in writing [letter or email] with that representative.

• Breaches of the Franchise Contract are dealt with in civil Court, however; typically where there is a breach of contract there is usually a breach(s) of the TPA and/or the Code.

• Before considering civil action a franchisee must gain legal advice from an experienced franchising lawyer and not just one that purports to be. The lawyer should have a history in specifically being involved with, and hopefully, resolving franchising disputes. If the franchisee is underfunded and the franchisor is likely to use its financial power to win by default in a drawn out and expensive action that cannot be sustained by the franchisee then that likelihood should be considered at the outset.

• A written complaint to the ACCC should not contain issues not specifically related to breaches of the Code of the Act.  The issues in dispute should be referred to the appropriate section(s) of the Act and/or the Code. Allegations must be supported by evidence and a ‘critical mass’ of franchisee supporters.

• Franchisees should always pursue their complaint with their local Federal and State representatives. Most politicians have been confronted many times by franchisees caught in abusive franchising.

• Franchisees who believe that the ACCC has been negligent in their investigation of a formal complaint should contact the Commonwealth Ombudsman.

• If a franchisor has broken a criminal Law than the franchisee should contact the Police in their State.

NOTE: Complaints to the Franchise Council of Australia [the ‘FCA’] have NO effect other than a very vague possibility that the franchisor might have his membership from the FCA revoked.  The FCA represents franchisors and while it suggests it also represents franchisees that is not the reality where the FCA operates from franchisor direct and indirect funding and membership.

When all else fails Blog the Brand

If you are in the middle of a serious franchise dispute and your franchisor is refusing fair and reasonable negotiation have you thought about a blog?

Blogging a brand can be a useful tool to leverage a more reasonable relationship with a franchisor however; there is a down side. The issues in dispute must be network issues that are considered to have serious detrimental financial consequences for all franchisees within the network.

Blogging about brand disputes has the potential to create difficulty in selling franchises for the franchisor and that hurts. At the same time it can make it difficult for individual franchisees to sell their franchise if that is at all possible.

There are many painful flow-on effects for franchisors when suddenly they cannot sell franchises.  It is then that they may react to value existing franchisees and the profitability of the franchisee financial model.

‘WordPress is a state-of-the-art publishing platform with a focus on aesthetics, web standards, and usability. WordPress is both free and priceless at the same time.’

Using WordPress allows bloggers to take advantage of its’ search engine power that cannot be duplicated without considerable funding.  Cross-Linking to existing and similar blog sites ensures a greater audience and result.

Learn More about WordPress

Get a FREE Blog on WordPress

You get a choice of Easy-To-Use ‘Theme’ templates and if you take some time to consider what information you want to distribute then you are off and running remembering that mentioning individuals or stretching the truth can have repercussions.

This blog involved a mere 3 hour effort. The shot you fire will be heard around the world.

Anyone that has created a franchise blog site should ensure a link is emailed to AusFranchising@hotmail.com for inclusion on this blog and distribution to other sites.  Blogs should include the growing list of links one this page.

Related Reading: Internet Vigilante

TIP: Effective blogs are clinical and factual. Emotive content focus readers on the emotion and not the facts. Anger and personal attacks should be avoided.  Exaggeration and false information regarding franchising is unnecessary and destroys credibility.

PLEASE NOTE: Questions, comments and News Items on franchising should be directed to BlueMauMau and the additionl websites listed on this page.