Franchise Scams & Bad Eggs Posted by Matthew

Franchise Scams & Bad Eggs

Posted by Matthew in Franchise on 21.11.2008 5:03:05 pm | 172 views

Although the UK franchise industry as a whole is an ethical one, there will always be the occasional scam & bad egg in the basket. This may be a franchise with an existing franchisee network who do not deliver what they promise or a new business on the scene marketing themselves as a franchise but only after the franchise fee before they take off running.

During my 2 year run of The Franchise Shop I have came across a few and with those few there has been one easy way to find out about them.  Google.

Now, this is not a foolproof method but your first step when researching a franchise should be to find out if there are any horror stories circulating about them and the days of trawling through newspaper archives are well and truly over.  A few simple Google searches will either give them a clean bill of health or come up with forum posts, rip off reports and scam warnings.

You do of course have to be careful as there are sometimes occasional reports made about perfectly decent franchises.  Perhaps the franchisee was not suited to the franchise and failed to run it correctly, blaming the franchisor for his failure.  However these can usually be separated from the "I handed over £15,000 and never heard from them again" stories.

There are so many franchises out there now and I have came across literally thousands of happy franchise owners compared to the handful of unhappy ones, it's all about being careful and ensuring that your hard earned money is going to buy a future for yourself and your family.

It's funny though, I have never had a happy franchisee phone me up at random and let me know what a great franchise they have bought into, on the other hand though I have fielded several dozen calls from people wanting my help as they have lost a lot due to unethical franchises and scams, many mentioning the same franchise... Well, when I say franchise, a franchise should be the sister arm of a profitable parent company, not some fly by night businesses that masquerades as an "opportunity"

2 franchises I am really impressed with this year are TorqueFast and Stagability Stage Schools.  Both have run as profitable businesses for many years and are limiting how many franchisees they take on to just a few to ensure brand quality and to concentrate on getting all the right systems in place.  This is the ethical way of franchising... I have also seen several this year who never had a chance of taking off, and who I would not recommend at all, why?  Because they went straight from business to franchise.  The business itself has been set up purely for the purpose of franchising and making money from the franchise fee, showing little or no profit from the existing "parent" company and likely to fail for themselves and for any franchisees they take on.

If you have any bad experiences I would love to hear from you, and I would be even happier to hear about your great experiences so we can share a little love for this fantastic UK industry, remembering the the UK is where franchising first came about in the middle ages and we should all be proud of our UK franchise roots! (some people will say is was Isaac Singer and his sowing machine franchise but don't believe that nonsense!) :-)