It is becoming more of a regular tactic for bitter or angry and frustrated franchisees to publish anti-brand websites. Few come about with any real dispute resolution strategy and some are downright dangerous. Some strive to protect franchisee investments.

One would hope but that an individual or a small group of franchisees haven’t set about attacking a brand where the overall performance of the brand hasn’t justified such an approach to resolving complaints.

Typically franchisees understand the damage they cause to franchisee investments when they publish such sites where the sites are seen as a desperate last resort.  Such websites should always be considered as the very, very last resort and only when the franchisor’s practices are clearly destroying franchisee investments and all other avenues of resolution have been at least explored.

Re-franchising [churning] of franchises is now accepted as not an uncommon practice of the rogue, opportunist franchisor; i.e. driving large numbers of franchisees into financial collapse and/or reactions that eventuate in the franchisor taking back franchises for little if any cost or terminating franchisees.  Their businesses are then resold producing huge franchisor profits.

It is immoral to publish such websites without the support of a critical mass of franchisees.  It must also be acknowledged that all franchise systems will produce some level of failures and also that in the worst franchise systems opportunist franchisors will generally attempt to cultivate a small core of ‘preferred’ franchisees. Such franchisees are useful for, amongst other things, deflecting criticism.

Unfortunately most anti-brand websites achieve very little in the short or long term simply because they are a poorly considered and originate from an anger reaction and knowing such sites are inexpensive and with today’s template sites, simple to create.

Those franchisees who publish such sites clearly identifying themselves are asking for trouble.  They and their vocal supporters will be targeted and usually terminated. All franchise agreements protect the brand from damaging and public criticism from franchisees and like so many other clauses leave the franchisor with the option to terminate.

It is argued that such sites offer an alternative to stop franchise churning where regulation and legislation are ineffective and fearful and foolish franchisees refuse to collaborate in forming a financially strong franchisees’ association. 

The goal for anti-brand websites would be to limit or wipe out inquiries from prospective franchisees and ensure that an opportunistic franchisor has to reconsider its franchising reputation and the value of existing franchisees.

Churning franchisors typically need to attract new franchisees to replace the departing masses or suffer the often expensive alternative of a rapidly growing and underperforming company shop network when their reputation catches up with them.

Midascon Australia

A brief profile of the 2006 midascon website offers an insight into how an anti-brand website will fail where Midas Australia had most of everything going wrong within the franchise. There was no lack of ammunition coming from the franchisor and the site’s supporting strategy was effective.

I’ll take some credit for what success the midascon site had even if it is only that my 2004 effort was a spectacular learning aid for the later publisher for what not to do.

To begin with my site had my name plastered all over it so I was destined to be picked off and was. Midascon however was published anonymously but what made it work more than anything was that it had a clear plan of attack and a goal.

If Midas Australia churning wasn’t the worst case in Australia then it has to be close. Franchisees recognized the blatant escalation of profiteering from every aspect of the business including that somewhere between 75 and 80% of the advertising fund was being misappropriated. Franchisees were rolling out far quicker than they could be replaced. There was an environment of threat and fear.

Franchisees had attempted to resolve disputes since early 2002, lodged numerous complaints with the regulator and attempted on more than one occasion to get franchisees to band together. 

Terminations had begun in early 2002 around 9 months after the Australian master franchise had been acquired from Midas International. They continued up until 2006. The first to go were those who had the greatest respect of the network. The media began reporting on Midas in 2004. I was terminated in September 2004.

By 2006 the franchisor had acquired so many underperforming company shops within a model that had been reduced to a complex system of revenue streams it developed a cash flow problem with major suppliers having the company operation on COD and a massive rent debt continuing to grow out of hand.

Media and government involvement

Midascon. with the support of the majority of a desperate franchisee network, was not just publishing the difficulties everyone was facing at Midas, very importantly, it had an email campaign to media, landlords, suppliers, competitors, government and franchisees directing them to site updates. The email and media campaign made the site work. By 2006 Midas Australia could not give away a shop.

Midascon was successful because franchisees and head office staff fed the site the information it needed. Everyone recognized that franchisees were damned to failure if they did nothing and damned to damage their business values if they attacked the franchisor. They figured there was nothing to lose.

The midascon goal was to force the franchisor to value the existing franchisees because no new prospects were likely to sign a franchise agreement. None of the network that started out with the new franchisor in 2001 was left when the franchise went into administration on Christmas Eve 2008.

There were no winners.

Apart from a few who managed to sell in the early days the rest suffered some level of financial loss that went from substantial loss to bankruptcy. Many suffered the health and family disasters acknowledged in the world of opportunistic franchising.

More might have been saved had the franchisor’s ego allowed him to accept the inevitable loss of franchise inquiries but his madness continued until the end with attempts to shore up more backers. 

The only people spared were those potential prospects who reacted to the Midas Australia franchising reputation and ran for the hills.

In the end I doubt the midascon website cost the publisher more than $200 but it would have taken many hundreds of hours to maintain over its short life span of about 8 or 9 months. Again; there were no winners.

Independent Franchisee Associations:  At this point recommended reading would be many of the blogs from Richard Solomon and  Michael Webster on independent franchisee associations.

Note: In Australia and around the world there have been franchisors who insisted on learning that a bad franchising reputation can stop brand growth in its tracks and be very expensive.  Many persist.