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Dear Franny (Guests Post Questions Here)

Franny answers franchisee questions

Ask FrannyThis forum was created so that readers and members of Blue MauMau can post questions to Franny about issues of interest to small business and franchise owners. Franny sometimes invites world-class subject matter experts to answer tough questions

If your post is answered by Franny, it will be featured on the front page of this journal under the "Ask Franny" column.

In your post, please do not mention your franchisor's, vendor's or your own firm's name. The intent of this forum is not to give press to a brand name but rather to ask general questions that franchise owners within and outside one's brand might find of interest. (There are press release areas to sell what's great about a brand or other forums to tell tales of franchisee rip off.) Your question may be edited for clarity, brevity and frankly, some entertainment value.

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michael webster's picture

Instant Tax Service UFOC

1.  Getting your money back in the first year is a franchise earnings claim.

2.  Check item 19 of the Instant Tax Service UFOC, it should a) state you are going to make your money back in the first year, and b) explain why.

3.  If it doesn't say this, please run away... run away... run away...

(If you need help with finding the UFOC, ask me.) 

Michael Webster PhD LLB
Franchise News

Instant Tax Service UFOC

Mr. Webster ...

I am an Instant Tax Service Franchisee in Houston Texas. Instant Tax Service doesn't claim you will get your money back in the first year. Instant Tax Service WILL GIVE you your Franchisee Fee back after the first year if you are not satisfied. Show me another franchise that will do that!!! Good Day Sir

Franchisee Purchasing Requirements

I understand the requirements of Franchisees having to purchase inventory from preferred vendors to maintain consistency in product delivery, but what about equipment used to produce the product. What is a reasonable premium for a franchisor to receive on a $30K piece of equipment?? 10%, 20%?? and yes, "the franchisor has the right to implement a centralized purchasing system for the franchisees and negotiate prices and terms with suppliers and to receive rebates"

There has to be some level of reasonableness on what the franchisor can charge. I found the "exact" same piece of equipment for half the price. Do I have any recourse or am I stuck???

Frachisee Purchasing Requirements

CAN SOMEONE PLEASE HELP ME HERE? I am getting nickled in dimed all over the place so "kickbacks' can be received by the franchisor. Oh I'm sorry did I say kickbacks, I meant "Rebates"

Budget Blinds - Home Franchise Concepts

Curious as to your opinion on the numbers below. Is the net loss a negative indication? I think it is probably is. Company lost over a hundred franchise territories last year but sold over a hundred new territories for just a slight loss. There is very little negative information on the net regarding this franchisor, and the lack of much litigation seems positive.

Year

USA Franchisees

2008 2007 2006 2005 2004

1,009 1,047 1,062 915 730

Just starting our due diligence.

Thanks.

Budget Blinds

>>Curious as to your opinion on the numbers below. Is the net loss a negative indication? I think it is probably is. Company lost over a hundred franchise territories last year but sold over a hundred new territories for just a slight loss. There is very little negative information on the net regarding this franchisor, and the lack of much litigation seems positive.

Year

USA Franchisees

2008 2007 2006 2005 2004

1,009 1,047 1,062 915 730

Just starting our due diligence.

Thanks.<<

You need to work your way through the list of transfered and closed locations to get the answers. Did they close the doors, sell or simply go independent. Possibly the franchise agreement was loose enough to allow independence.

Now, is not the best of times for the market segment served. The economy is terrible, people may defer buying new blinds. Other than that, Home Depot and Lowes sell blinds and cut them to exact size in the store for less money! This makes a viable concept less viable.

The barriers to entry in this business are realatively low.

If you are seriously considering jumping in, talk to local blind fabricators about using their services. Come up with a name and go for it. "If they can see in, you need to call Hang-ups by me!"

Budget Blinds

>>Curious as to your opinion on the numbers below. Is the net loss a negative indication? I think it is probably is. Company lost over a hundred franchise territories last year but sold over a hundred new territories for just a slight loss. There is very little negative information on the net regarding this franchisor, and the lack of much litigation seems positive.

Year

USA Franchisees

2008 2007 2006 2005 2004

1,009 1,047 1,062 915 730

Just starting our due diligence.

Thanks.<<

You need to work your way through the list of transfered and closed locations to get the answers. Did they close the doors, sell or simply go independent. Possibly the franchise agreement was loose enough to allow independence.

Now, is not the best of times for the market segment served. The economy is terrible, people may defer buying new blinds. Other than that, Home Depot and Lowes sell blinds and cut them to exact size in the store for less money! This makes a viable concept less viable.

The barriers to entry in this business are realatively low.

If you are seriously considering jumping in, talk to local blind fabricators about using their services. Come up with a name and go for it. "If they can see in, you need to call Hang-ups by me!"

Budget Blinds

We actually are calling every USA franchisee listed as being terminated or released. When you call the ex-franchisees, most phone numbers have been disconnected. You have to do a zabasearch or similar to reach them. Some have gone bankrupt and others said it just wasn't for them. A number of them had to sign NDAs and so were reluctant to talk, though (in my naivety?) I don't understand the secrecy. I expect mostly negative comments as if their experience were positive, they would probably still be with Budget Blinds.

One thing we were hoping to gain by the franchise route is the branding and the training. The Discovery Day experience by this franchise is enticing. While we realize that its main purpose is to sell us on their concept they do try to vet their prospective franchisees in it also.

Again, I very much appreciate your help in these tough decisions. Also, Mr. Solomon's articles on his site were informative and helpful, though they increased my middle aged cynicism even more of any franchisor out there.

Thanks again.

[email protected]

visualization

>>I don't understand the secrecy. I expect mostly negative comments as if their experience were positive, they would probably still be with Budget Blinds.<<

You are right that you would get mostly negative comments, just beware that you don't get lulled in discounting all the negative comments. This would defeat your purpose.

Re: visualization

Thanks for the assistance.

Our number one franchise we were considering just lowered their purchase price by around sixty thousand dollars. Seemed more like a get you in the door special so we took them off the table. And even given the selection bias we experienced calling the ex-franchisees, we talked to too many people that were bankrupt or too close to it.

Numbers two and three wouldn't give us any hard numbers on earnings for all of the franchisees so we pulled the plug. We would get earnings claims but there were too many conditional statements attached. Just seemed too elusive.

After much research and some dollars spent, we have decided to move on without purchasing a franchise. We may start our own business or buy an existing but feel more entrepeneurial than being under the fingers of the franchisor. I got the feeling that a lot of franchisees, of all kinds, were getting micromanaged and nickle and dimed. I'm sure there are great franchises out there -- we just didn't run into that many positive stories regarding franchises that were available for under $500 thousand.

Good luck to all and thanks for the informative web site.

Nathans

I am very intrigued at the due diligence conversation and was curious to know how much the general cost of a franchise attorney SHOULD be. I believe It is a no brainer to save your investment and I would be starting my first franchise so not getting burned too heavily would be of great importance.
I was wondering if anyone has any thoughts about the Nathan's Famous Franchise. My interest in the concept would be to build the brand out in California. The problem is that I have had little success getting any fedback with respect to the brand. Any feedback that could be offered would help.

michael webster's picture

Fees for DD

It should be around 3-5k, involve homework, and last between 4-6 months.

Don't have lawyer simply read the contract for you. 

Michael Webster PhD LLB
Franchise News

A lawyer should tutor his witness before he goes to witnesstand

hai,please give your view on the above topic.

RichardSolomon's picture

Of course a lawyer needs to flog his witness before the witness

has to deal with actual testimony. For a complete statement of why and how, see Preparing A Witness To Testify on www.FranchiseRemedies.com

--http://www.franchiseremedies.com/witness.htm

Richard Solomon, FranchiseRemedies.com,  has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Re: Dear Franny (Guests Post Questions Here)

is a quiznos considered a good and fair franchise ???

Astro and Astro Events www.astrojump.com

I'm thinking about becoming affiliated with the above group. Can anyone tell me if they are a franchise or only a licensed name?

Howard R. Morrill's picture

re: Astro and Astro Events www.astrojump.com

They are a franchise--whether they know it or not.

But Howard...

What are you talking about? I called my business offering a "license" not a "franchise"!!!  You can't make me be a franchisor if I don't wanna!

The Truth Shall Set You Free!

TIF

Five Guys UFOC

Does anyone have a copy of a recent Five Guys UFOC? Thank you.

Michael J. Lockerby

FOLEY & LARDNER LLP

Washington Harbour

3000 K Street, N.W., Suite 500

Washington, D.C. 20007-5143

Direct Dial: 202.945.6079

Cell: 804.399.6089

Fax: 202.672.5399

E-mail: [email protected]

Admitted to practice in the District of Columbia and the Commonwealth of Virginia

michael webster's picture

2007 UFOC?

The 2007 UFOC is here: http://134.186.208.228/caleasi/search.asp?TASKNAME=xshowDocs&PackageID=2...

As for the 2008, FDD why not write them directly and make a reasonable request?

Michael Webster PhD LLB
Franchise News

Jimmy John's Gourmet Sandwiches

Dear Franny,

Do you have the scoop on Jimmy John's Gourmet Sandwiches??? I have a couple of partners interesting in this concept.

Thanks

Where can I get a UFOC document for Jazzercise to review?

I would like to review the Jazzercise UFOC (FDD) but can't find it online. I requested it from the company but did not receive a response. Where or how can I get a copy of the complete document to review? Thanks.

20% Rule

Does any know of a ruling that states as a franchisee you are allowed to purchase up to 20% outside the sole-preferred vendor so long as it does not infringe on propriety product?

20% Rule

Did you ever get an answer here?

territory identification

Are franchise geographic territories (for business services) available in the public domain or is this something that needs to be purchased through a vendor.

Blue Coast Financial

Does anyone have info about Blue Coast Financial, please? Fred

Blue Coast Financial

RUN. I was taken for a ride and lost $20K, plus many months and other dollars invested in their 'programs'. Don't get me wrong - the programs are legit - but they (Blue Coast) promised the moon, and all I got was a moon pie smack in the face. RUN, don't walk, to the nearest exit!

Blue Coast

You are not alone. I am in the same boat. Their promises are empty and expensive. They charge you for everything like brochures, training, etc. and no guarantee at all. you also pay for leads that are worthless and unqualified. Plus your fee % keeps changing.

Blue Coast Financial

I got the same moon pie smack in the face. I would be interested in hearing more about your experience. Give me a call at 646 345 2685 or let me know how to reach you. Thank you.

Re: Blue Coast Financial

Thanks for you time today.

Mike Price

713 391 45 46

Blue Coast

 Fred

I am ready to sign up with these folks as an affiliate, maybve we can share some information.

Thanks

Bob Anthes

Blue coast Financial

I have a Blue Coast Financial Business that I am looking to sell. They are a great company, however, it is not for me. I would be willing to get into great detail about the services they offer.

Blue Coast

Did you sell you franchise?
Thanks Jim

Blue Coast

I'm interested, please send me more information.

Blue Coast

Have you purchased Blue Coast yet?
Please let me know. Thanks

Business For Sale

How much are you selling it for? What is it about the business that is not for you, I just want to make sure it would be fit for myself.

Thanks.

Blue Coast

I am considering joining Blue Coast and wanted to get some perspective from someone who has already joined. If you do not mind donating a few minutes of your time and experience, I would like to find out more from you. Please contact me at anytime at 301-325-9566 or email me at [email protected]

Thanks,
Gary Pierpont

Blue Coast Financial Group

I have been interested in an opportunity such as this and would like information. I am particularly interested in learning whether their claims have been substantiated and if the support is really as strong as they suggest in their promotional pieces. In addition, I need to learn about the earnings opportunities.

Please feel free to contact me either by email or cell. I look forward to hearing from you.

Don Foley
[email protected]
(317) 341-2892 Cell Phone

Howard R. Morrill's picture

Blue Coast Financial

I'm aware they seem to think they're a business opportunity but not a franchise.  I'm unclear why they don't think they're a franchise.

UFOC and Fraud

If a section 4 of UFOC (prior litigation) has this statement "No litigation is required to be disclosed in this offering circular" and you recently found out that in fact there are 12 lawsuits, is the entire document fraud?

blue coast financial

are you refering to blue coast having 12 lawsuits?

Howard R. Morrill's picture

Prior litigation

"If a section 4 of UFOC (prior litigation) has this statement "No litigation is required to be disclosed in this offering circular" and you recently found out that in fact there are 12 lawsuits, is the entire document fraud?"

There are a few more details one would need to know.  Were these suits by franchisees against the franchisor?  Were they underway (or completed) by the time the UFOC was published? 

Prior litigation

Thank you for your prompt response. Details-all 12 were prior to us signing. And the majority are for breach of conract/warranty. In reading rule 436.1 section (4)(ii) "Has, at any time during the previous seven fiscal years, been held liable in a civil action resulting in a final judgment or has settled out of cour any civil action or is a party to any civil action...." All 12 lawsuits name either the name of company or the two principals.

From your statement, are you suggesting that this only applies to franchisees?

Howard R. Morrill's picture

re: Prior litigation

"From your statement, are you suggesting that this only applies to franchisees?"

No.  I'm simply trying to look at the materiality of the litigation.

re: Prior litigation

Thank you again - I feel better already. Now (1) if lawsuits were not disclosed on UFPOc is that fraud. And (2) If that is the case, does that make the entire franchise agreement invalid. Thank you.

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