franchising

The Mobleys got back on their feet by shuttering nearly all the full-service restaurants and instead focusing on franchising outlets in non-traditional locales like convenience stores, airports and military bases.

It then moved into stand-alone restaurants branded as both Noble Roman’s and Tuscano’s Italian Style Subs. The pizza and sub shops operate in the same location, much as some Pizza Hut and Taco Bell outlets do.

Including all its formats, the company now has more than 1,200 outlets in 45 states and abroad. It operates just three of its own restaurants, all in the Indianapolis area.

In a continuation of the opportunity to look at the financial frustrations of a failing or failed franchisee, I’m learning that all birds of a feather do in fact have different frailties. Yes, some franchise agreements are so very tough that the appearance of recovery of anything is dim. But wait. Having served tens of thousands of businesses, those franchisees served always had personal pressing obligations. Most had lease obligations, personally guaranteed. Many owed money to their ZOR. The majority had loan obligations to banks, family, or credit card debt. Vendors, other than ZOR were almost always owed some money. These liabilities appeared overwhelming, which they were.

Here’s a true story: Though I can’t use names.

“The value is in the restaurants and the real estate. You’ve seen this play in Sears-Kmart, Toys R Us and elsewhere. The companies may have problems, but the land they are sitting on still has value and the brand names still have value that can be leveraged,” said one consumer investment banker who declined to be named.

Mr Swain says the chain has not had any failures in the 72 openings, something he puts down to the Pitney Bowes MapInfo reports the company has relied on for the six years since arriving in Australia. Now he has taken the technology in-house with the release of MapInfo's AnySite, which allows faster real-estate decisions because reports and data can be seen internally.

"We use it to work out where we need to be without cannibalising existing clubs. It's an important part of our feasibility study."

The software uses the Australian Bureau of Statistics as a major source of data and is popular among shopping centre developers and franchise chains. It has been used by the company to provide consultancy reports for clients, but is now available as a CD-ROM package to allow technology-savvy customers to extract their own analysis.

There are franchise investment offerings that are so transparently not innovative, and that can so easily be done without whatever it is that the franchisors pretend they have that is “unique” (yeah, right). They request that a prospect sign a non-disclosure agreement / confidentiality agreement as a condition to being sent the offering circular or to being allowed to attend “discovery day”.

Franchising is not about democracy. Franchising is not about fairness. Here’s the deal – the deal is very one sided – the risks are high – we tell you that it’s a cinch if you believe and want to succeed – that’s our cheerleaders’ favorite cheer. Well, my friends, if you believe that cheerleading is reality, and you sign the contract and then are unable or unwilling to play the game that is going on out on the playing field (the real game), no one is going to change the rules to make tough people play nice. THAT’S WHY YOU HAVE TO BUCK UP AND LEARN TO PLAY THE REAL GAME OF DEFENDING YOUR SIDE OF THE FIELD.

And starting from electronic page 342 to 362 is a list of Quiznos owners and Area Developers who left the system. It contains their contact information. A prospective franchise owner will want to speak with a number of these Quiznos ex-franchisees.

In a Rocky Mountain News article this morning, Franchisees terminated by Quiznos seek injunction to stay in system, it states that a slew of lawsuits by franchisees and former franchisees, including Baber, allege that the company promises profits that are out of line with reality; that it forces franchisees to pay approved vendors too much for suppliers; that it allows stores to be built close together and; cannibalize each other; and that it blankets markets with coupons that further lighten the franchisees’ bottom line.”

Darden Restaurants, operator of Red Lobster, Olive Garden and other restaurants, said Saturday it's closing 56 of its Smokey Bones Barbeque & Grill locations, including the one in Downtown Indianapolis and two others in the metro area.

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"When U.S. franchisors structure international franchise arrangements, they too often take the domestic approach that they are accustomed to, only to later realize that the rules change and that engaging in disputes in foreign adversarial proceedings can be substantially more difficult, expensive and time consuming than the domestic judicial battles to which they are accustomed. Many franchisors find that a domestic kitchen-sink approach to drafting international franchise agreements is frequently a “turn off” to prospective international franchisees. In many cases, broad inclusion of standard domestic requirements appropriate for a domestic arrangement could be characterized as a knee-jerk response, wholly inappropriate for an international transaction setting the arrangement up for immediate confrontation or failure, simply due to lack of forethought. For example, provisions governing events of default that subject the franchisee to automatic termination without notice, mandatory contributions to advertising funds, mandatory accounting reviews, certain concepts of equity and even jury trials are not always appropriate for inclusion in international franchise agreements. Such forced inclusions by the franchisor are often an initial recipe for disaster."

Complaints include the introduction of a summery fruit salad in the depth of winter, the current ad campaign featuring men wearing pigtailed Wendy fright wigs and an autocratic decision-making style.

"Some franchise companies tend to overlook the details that are required to build an effective staff for their franchisees. Their primary focus is on opening the store and helping to sell products or services. Consequently, the employee headaches some new franchisees face may be hidden from view. Is the franchisee complying with labor regulations? Are illegal aliens being hired? What’s happening with the employee payroll?"

In this case, offering pre-screened vendors that remove some of the responsibilities and burdens associated with payroll, human resources and benefits can help franchisees to focus more on enlarging their businesses. This step will help to minimize the frustration these new owners feel when they become overwhelmed by new responsibilities and ensure that the brand’s logo doesn’t disappear from their neighborhood.

"In an effort to maximize the number of successful partnerships they enter, franchisors have turned to a variety of profiling tools that purport to predict a successful match."