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Editor's note: I have converted this news summary article into a forum since the story has turned into a long-term discussion group on Forte School of Music.
Franchisee complaints of profitability misrepresentation are a common and international one and yet franchisors throughout the world continue to insist they would never sell franchises on the back of return on investment [ROI] projections. It is difficult for me after 21 years in the franchising industry to comprehend how any investor could possibly be attracted to a major investment without such input from sellers? I don't have a problem with the provision of such information when it is accurate but when it is inaccurate and designed to scam it is clearly fraud.
At the center of numerous complaints of failure to deliver on promised support and training and breaches of Australia's Franchise Code of Conduct by the Forte School of Music franchise is that ugly complaint yet again. In two articles this week from journalist Tuck Thompson, Forte franchisee's blast the franchisor for what can be summed up to be a franchise model that simply doesn't return on investment. Courier Mail June 23 2009
The man alleged to have provided misleading profit projections to franchisees is Chief Operations Officer Paul Myatt. Myatt is said to have recently become a franchise owner in his own right when a departing franchisee who had invested almost $200,000 sold his franchise for $1.
Not surprisingly, and also not uncommon, we have a franchisor assuring readers that the complaints are ‘baseless' and from ‘a small number of disaffected franchisees'. [Courier Mail June 25 2009 attachment]
Forte School of Music has 10 franchises in Australia, two in New Zealand and three in the United Kingdom. Since August 2008 I have been in communication with this ‘small group' of complaining Forte franchisees which surprisingly totaled a ‘small group' of 60% of the Australian network. In a meeting last year in Brisbane franchisees tabled what I could only accept as evidence of a model that didn't deliver, breaches of the Franchise Code and breach of music copyright.
The Forte CEO mentioned at that meeting, Philip Ciniglio, was said to be avoiding Code mandatory mediation and yet he was an accredited Mediator with Australia's Office of [Franchise] Mediation Advisor and the then Queensland representative for the Franchise Council of Australia.
Forte franchisor, Gillian Erskine, now states that ‘mediation was not successful' and they will pursue matters in Court. The Australian Competition and Commission [ACCC] continues to investigate Forte franchisee complaints.
I need to point out that the ACCC has a relationship with Ciniglio's FCA just as it has with former chairman of FCA John O'Brien. O'Brien's Poolwerx franchise was most recently awarded an exemption from third-line forcing [tie-in] on across the board franchisee purchases.
Clearly the ACCC rely on FCA for direction on franchising regulation. The ACCC's record of investigations into franchising is abysmal and the resulting findings from across Australia have produced great criticism in the media from many brands, for many years including Kleenmaid, Bakers Delights, Lenards Chicken, Midas Car Care to name only a few. Whether there is a direct relationship with the ACCC and an FCA representative does not seem to matter in the ACCC not pursuing franchisee complaints; but it seems to help.
On the upside; Forte franchisees seem to believe the franchise system is ready to crumble and suggest their best defense is a strong offense considering their combined arsenal of evidentiary ammunition.
In relation to rejecting that profit projections are commonly given to prospective franchisees regulators should consider my recent statement to Australia's Minister for Small Business, Craig Emerson, on broader government failures; ‘this is you p*^^ing down the back of every Australian franchisee and telling them it's raining'.
|Forte School of Music 25-06-09.pdf||1.16 MB|