20yearzee's blog

Franchise agreements give franchisors incredible power.

The more time that passes from my days of operating under a franchise, the more I understand the unbelievable amount of time, energy, and emotion that is expended on a franchise relationship.

Well, just back from visiting Belgium, Luxembourg and Amsterdam.

I am often asked if I would ever be a franchisee again, given my experiences as a franchisee of 3 different concepts over many years.

My answer:  Yes, IF in the agreement:

It occurs to me that anyone purchasing a franchise these days should understand that a large percentage of their gross income could end up being spent on legal fees.

Maybe we should come up with a "contingency" item on every zee budget that includes a big chunk of cash set aside to fight the franchisor.

If, by some miracle, you don't have to use your defense fund, you can send the kids to college.

Okay, folks. I have only been a member of this blog for a week or so, but I have yet to hear from a happy franchisee on this blog. Maybe I've missed one, but I don't recall one.

TIF says all his franchisees are happy, but they don't blog.

Do only unhappy zees or zees in trouble blog?

Are the happy ones too busy running their businesses to fool with this?

Where are the happy customers of franchise brokers?

Where are the satisfied franchisees that did their due diligence, and have no complaints?

As far as I can tell, there are not many zors on here either. Maybe they are monitoring as guests.

Happy Franchisees, if you are out there, please chime in - somebody has to be happy, don't they?

Does anybody else find this a mystery?

If you were buying a franchise in this particular automotive service franchise, you might be interested in the comments on the front page of the  December 2007/January 2008 franchisee association newsletter which read:

"In fact, with the increasing COGS (cost of goods), pressures from the new minimum wage, the re-image costs launching April 1, 2008, lack of brand loyalty, divestiture of company stores, declining vehicle counts, and an ever changing consumer, the year 2008 may be the most financially challenging year in the history of _________."

Further into the article, the President said:

"The fourth quarter of 2007 is raising a lot of eye brows as to the negative trends for both vehicle counts and sales"

You would also have seen that "cars" in the system were down 5.5% in October and 5.8% in November, and 2.9% year to date.

What a great "interim report" from the franchisees themselves on how the system is doing!

Jiffy Lube's Largest Franchisee Disagrees With Franchisor, Then Files for Bankruptcy 

Jiffy Lube's largest franchisee is in chapter 11 bankruptcy, allegedly because it had a disagreement with the franchisor, and oil and gas prices are high. The United States trustee has filed a comment in the case as follows:

"Quad-C partners received millions in stockholder distributions from the Debtors in the three years preceding thier Chapter 11 filings.  Between 2006 and 2004, the Debtors increased their long term debt obligations from $35,150,000 to $217,547,846 (an increase of $182,397,846). Over $127 million of these proceeds were paid to stockholders during fiscal years 2005 and 2006. The remaining $55 million was used for corporate purposes. Given that as of March, 2007, Quad-C partners had a 74% equity ownership in the Debtors, Quad-C would have received the bulk of these proceeds."

The Franchisor's Revolving Executive Door

In my 17 years as a franchisee, I had the pleasure (tongue in cheek) of operating under the watchful eye of seven franchise presidents. The average tenure was about three years.

Each of these fine folks had top credentials - MBA's, lots of experience in the corporate sector, great resumes. Each came with his own idea of how this franchise should run, and each had his own style of management.

Just as you thought you had one of them figured out, he either got promoted, or "moved on for personal reasons". Then it was time to figure out what the next guy was going to do.

Those of us that had been around the franchise for many years found ourselves in a sort of "deja vu all over again" situation - meaning that about every other president would be dead set on trying something that had failed two presidents before him.  Try as we might, the veteran zees could never convince the new guy that his idea was a rehash of an old idea that had failed.