Franchise Horror Stories

Submitted by JCDooped on Mon, 2007/03/12 - 08:59.

When one purchases a franchise it is because they want to be business owners and taught by professional business owners (franchisor) who have proven business models that they follow step-by-step. 

Franchisors interview potential franchisee's period.  They know whether that person has experience or not and/or can follow their business model.  The purpose again is to "learn how-to".

Alot goes on behind closed doors after you're into a franchise.  Often too late to get out because of the capital invested.  That is when you find out whether there is a proven business model in place in all areas, especially for marketing, and whether the projected gross revenue is based on actuals or some other calculations.  You also find out if you raise too many questions you are treated like nothing by the franchisor for raising those questions and that you are always to blame for your business not working. 

So to those who again blame the franchisee for their business failure - not every case is based on the franchisee's failure.  Once you become disappointed in your franchisor it is very hard to continue the relationship in a productive manner on either side.  If franchisee's were well versed on starting and operating their own businesses they wouldn't need a franchisor, especially one that is not well known like McDonalds, Burger King, Kentucky Fried Chicken, etc.

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Money Mailer threatening legal action against failing franchise

Submitted by Guest on Wed, 2007/08/15 - 12:26.

I made the mistake of starting a Money Mailer franchise 2 years ago. I have invested a large amount of money, and have lost larger and larger sums every month as I followed the franchise growth plan. Little of the promised training or marketing support ever materialized.

Two months ago, my health failed (partially as a result of financial stresses) and I realized I could no longer stay in business.

Last week I was contaced by Money Mailers Legal department that I may be held responsible for all of the royalties and penalties for the entire duration of the remaining 8 years of the agreement, "a sum in excess of $250,000, plus legal fees".

Cold Stone Creamery

Submitted by Guest on Tue, 2007/08/21 - 09:47.

Cold Stone is a sad example of poor marketing and a business model that just does not work for the franchisee. I belive that they started off with something good but then they got greedy, opening too many stores without the proper research and making the stores too expensive to open with the new look that came out in late 2002-2003. Before that, the stores were only about 150K to open, which was reasonable, and the market was not over-saturated with stores so owners were not competing with each other to make a profit. If you talk to top execs at Cold Stone they will ADMIT that the business model does not work and that with current sales, the stores are too expensive to open, but they have known this since 2004 and they have not slowed down selling franchisee agreements - on stores they know will never open -and they have not done anything to lower the cost to open these expensive built-out stores. Their arrogance and marketing failures have been a disaster for the franchisee community and yet they still blame failure on the franchisee and do their best to portray every failed store owner as a poor operator. Very similar to the problems with Quiznos, the area developers for cold Stone were pressured to sell as many agreements as possible and also were compensated for it. That led to people buying up agreements on locations that were never opened and losing their franchisee fee (now up to $40K) and also a lot of stores opening in poor locations or too many stores opening up too close to one another.

Use caution Findley Group

Submitted by Guest on Mon, 2007/09/24 - 07:24.

THe Gary Findley group is taking money for franchises that are not market able. Most malls will not allow the Showcolate kiosk's so check with your local mall before you send money.

Another franchise like QUIZNOS is 123 FIT by the same people.

Submitted by Guest on Tue, 2007/09/25 - 12:31.

I wish I had read up about all this before I bought a 123 fit franchise. This is a 30 minute circuit training fitness club. Believe it or not this has been started by Rick Schaden, Brooksy Smith, and Dan Demolli, John Gallivan, Michael Grodi, John Fitchett other Quiznos has beens that have bailed from the Quiznos franchise. Seems they are utilizing the same "screw the franchisee concept" with fraud, misrepresentation, blah, blah...to get this supposedly new revolutionary "simbio system" workout going. The same lies, misrepresentations, fraud, errors and omissions as the Quiznos franchise. I am sure they have taken the Quiznos UFOC and replaced the name in there with 123 Fit. DO NOT BUY INTO THIS FRANCHISE. You will lose all!! Approximately 20 clubs have already closed down. Some Quiznos has beens have already bailed on the 123 fit franchise and moved on after losing their money. But 123 fit, Rick Schaden, Brooksy Smith still continue to prey on people and sell this "Simbio system" concept that they lead you to believe is exclusive for the 123 fit franchise. The only thing that is exclusive is the made up "simbio" name that they put on the Life Fitness equipment. AND IT IS NOT EXLUSIVE PEOPLE!! Go to Life Fitness website under the circuit training section. You can buy this same equipment through them. You DO NOT NEED 123 Fit, ex-Quiznos people, to do this. SAVE YOUR MONEY. RESEARCH!!! I dont want you to go through what all of us have been through. It is a nightmare.
Signed 123 fit owner

123 fit The latest update

Submitted by Guest on Fri, 2008/01/25 - 07:22.

Clubs are closing their doors faster then they can open. As of date, they have 29 clubs that are open with 4 of them closing here in the next month or two. That adds to the 28 or so that have closed their doors. So if as many clubs have closed that are open, shows you the 123 fit Franchisor DO NOT KNOW WHAT they are doing and it is BROOKSY SMITH'S fault.

If you are looking into this franchise, really look. If you dont want to commit a financial suicide then stay away from them.

THANKS FRANCHISING SUCKS

Submitted by Guest on Sat, 2008/03/29 - 20:27.

We are going to the attorney generals office and to whoever will listen to us. We have lost everything, but our right to revenge.
We will have our revenge. We were not prepared finacnially for this business and the training we got was non existant. We were lied to and tonight my family is cleaning offices for the first time and making real money and guess what we are not paying a vampires royalty. Let them sue us!

Journalist Seeks Disgruntled Franchisees in South Florida

Submitted by Guest on Tue, 2008/04/01 - 12:15.

I am a journalist, and am writing a general readership trade book that touches on the politics of the franchising business. I am looking for franchisees who have had a bad experience with their franchisors, and who are willing and able to speak about what happened. I work out of Washington, DC, but for a variety of reasons, I especially want to speak with franchisees in South Florida.

Please contact me at (202) 431-6066 or lynn@newamerica.net.

Thank you,
Barry

Our life has ended! We are destroyed thanks to our Franchisor

Submitted by Guest on Sat, 2008/03/29 - 19:32.

We understand we have lost everything. Tonight we are sleeping on an air-bed. We lost our home and our furniture. My husband is so depressed that he is not even able to get a job. I hate the day I was told "we would now be able to live our dream." Dream??? You mean nightmares!!!!!!!!!!!!!!! Franchise sales people should rot in hell. Why should we be subject to sales tatics. You were taken advantage of just like us, buy smooth talking franchisors that could care less if you loose everything! No friendly calls or help now.
We understand.

123fit, a Great Fit!

Submitted by Guest on Fri, 2008/05/02 - 13:50.

"If you don't Use it, You lose it." It is a quote heard throughout
the fitness world. It also can be used in the business world.
The 123fit concept is a very very good one, but when owners don't
want to Use the advice given, why be surprised when they are not
succeeding... When a franchise is successful, it is "the owner"
when they fail, it is "the company or concept" shame on the owners that just don't want to listen. I am successful, thanks to the 123fit company.

You must sell 123fit franchises

Submitted by Guest on Sat, 2008/05/31 - 20:09.

"when they fail, it is "the company or concept" shame on the owners that just don't want to listen."

What bullshit.
This is the lie used by every franchisor.
(Like people would invest tens of thousands for guidance THEN NOT LISTEN???)
You MUST be a 123fit salesman.

If this is true

Submitted by Do Diligence on Fri, 2008/05/02 - 15:56.

I really am happy for you.

Success in any system has to do with many factors. You may have very low rent, your build out was hardly anything and you were one of the few that had the support of the company.

I understand there is only 19 clubs left. When we opened there was 39 stores. Do you think it was all our fault? 123 Fit at the end of 2006 was suppose to have 190 stores. Alittle behind aren't they? How long do you have on your lease? 7 to 9 years? I hope you have continued success because you have a long ways to go.

I understand the club in Kansas City, Mo. closed last week. It hit the news. Was it their fault too?

"I am successful, thanks to the 123fit company."

Submitted by Howard R. Morrill on Fri, 2008/05/02 - 13:57.

Please elaborate.

Baskin Robins Australia has Same Problem

Submitted by Guest on Wed, 2007/08/22 - 13:00.

While Cold Stone has not tried (yet) to enter Australian market. the operators of Baskin Robbins stores in Australia have problems almost exactly like you describe in the USA. Stores here are much too expensives (and they are built with used equipment often from failed stores) and because of the high cost of imported product (ice cream, cones, paper, virtually everything) very few of the stores make any kind of reaonable profits. The company owned by Allied Brands and has NO business model for new stores - none. Australian people are suckers so easy to find people wanting to own their business without doing good checking. The company is being run by finanancial people as a stock market company with only concern for stock price going up. The market has almost same number of Baskin Robins stores after 15 years - a few successful locations in high tourist areas and the rest struggling and failing to be profitable. Company blames all problems on franchisees - a standard technique for shutting them up. Almost no regulation by government and Australian people don't use court system like USA, so company can get away with screwing everyone without any punishment.

Post-termination royalties

Submitted by Paul Steinberg on Thu, 2007/08/23 - 08:18.

Try reading Bruce Schaeffer's book, which discusses the topic, and/or contact him and see if he can refer you to proper counsel. Remember that litigation is probably going to be in the zor's hometown, but look at your franchise agreement.

Money Mailer Franshisee problems

Submitted by Guest on Thu, 2007/08/23 - 16:58.

Please provide additional info about the Money Mailer problems

Is this a bad franchise to own?

Money Mailer Questions

Submitted by Guest on Thu, 2007/08/23 - 17:00.

I was contemplating purchasing an existing Money Mailer franchise.

It this a very risky proposition.

I have been having trouble finding reliable information about Money Mailer franchises.

You need help! Money Mailer ZOR Is Ugly Example!

Submitted by Guest on Wed, 2007/08/15 - 13:11.

Sorry for your bad experience with Money Maker. These ZORS are ugly in their attempts to extort money from failing ZEES.
Unfortunately, you will have to get an attorney to extract you from this bad situation ----Make sure you get one who has worked with franchise termination and law.
Depending on the State you live in, there may be relief. This term in the agreement you signed may be unconscionable under some State laws.
Good Luck to you and remember that your health comes first and don't let anyone take your health from you. Start documenting your case, gather up your records, your "ill health" etc.. and get yourself a good attorney. Call your State/Federal Representatives and Senators and complain, etc... This won't hurt.
Good Luck and remember that you are not alone.

It's starting

Submitted by RichardSolomon on Wed, 2007/09/26 - 04:11.

I'm already getting 123Fit calls. This is going to be another mess. It brings up an important due diligence point. Some people's names appearing anywhere - whether in the UFOC or elsewhere, written or oral - are such a due diligence red light that the name alone should make the proposal a good FranWhack candidate.

Lawyers who advise about franchise purchases might start accumulating a Rogue's Gallery of bad franchisor names for reference.

Many of the bad guys aren't widely notorious, and just a few of us may know of many of them. We might be doing the entire BMM community a great service to have a listing page where people could find the names of franchisor personnel who's names alone would cause us to recommend against doing business with them. Inasmuch as that would be like a Dunn&Bradstreet sort of opinion reference based upon their known history, this would not be a slander issue, though many of them would claim it is a slander issue, and it might be that we have to defend against such a claim and actually win one to make the point. If other lawyers who strongly support this forum site would join in, I would happily participate in a group of lawyers willing to defend against actions brought to intimidate BMM - pro bono.

BMM is too valuable to the franchising community to allow it to be intimidated by the bad guys. 

Richard Solomon
www.FranchiseRemedies.com

From another sad 123fit owner!

Submitted by Guest on Wed, 2007/11/21 - 11:34.

Our experience with 123fit has been a horror story from the beginning. I have to admit that I personally love the circuit and the business. I love the people who come into our site. I feel like I am letting them down. The people I have grown very fond of. Unfortunately only 5% of the population are dedicated to excercise and really taking care of themselves. The area directors claim we have 95% of the population to market. Human nature is to be lazy. What happens is many quit because they get tired of the circuit or can't motivate themselves to work out.
The 123 fit franchise came up with a brillant circuit. If only the people who got us started were honest and cared about our welfare. We had no representation from the beginning and that is why we have ran out of money and can no longer afford to carry on. our area director has been supportive. If only he was there from the beginning. I know he would of advised us better. Maybe I'm wrong because I tend to be too trusting. I still want to believe there is good in people. It doesn't change the fact we have used all our equity lines. We are going broke even when my husband and I have never hired an employee. If you buy this circuit you will have a great circuit. Cover your ass and have 3 to 5 years capital to make sure you don't have to go through what we are going through. Most of all know your market. (One area my husband and I failed at.) If we had known about having 3 to 5 years capital to insure against the obvious we would never had gone into this business. I felt a responsibility to write something. We have never spent so much money in such a short time. There goes our retirement and dreams. We just have to regroup get out and build new dreams. Dreams that envolve a life more simple. Oh well I came into this world with nothing and I will leave this world with nothing. But as long as I have life I will fight to succeed. But if something is not working it is pure insanity to continue. Perhaps we didn't have enough time to succeed. The truth is we didn't have enough money.

A very sad 123 fit owner!

123 fit closes more clubs

Submitted by Guest on Fri, 2008/02/08 - 11:42.

More on this loser. Brooksy Smith, president/owner of 123 fit along with Rick Schaden, has CLOSED his 2nd 123 fit club in Texas. He did it very quietly. Now hows that for franchise support. Even the owner of 123 fit CANT open a club and keep it running. So much for his "proven system"

DONT BUY 123 FIT or anything that has Brooksy SMith or Rick Schaden involved. They are CROOKS!!!

I'd sell my computer and get a proper bed

Submitted by Guest on Sat, 2008/03/29 - 19:37.

can't sleep on a keyboard.

Yes we were

Submitted by Do Diligence on Sat, 2008/03/29 - 19:38.

taken advatange of. This is an American Tragedy.

So its okay for you to violate the terms of your agreement?

Submitted by Guest on Sat, 2008/03/29 - 20:51.

I hope they do sue you, win and get paid.

 Revenge is buying a

Submitted by FuwaFuwaUsagi on Sat, 2008/03/29 - 21:06.

Revenge is buying a person’s mortgage, allowing them a no-cost refinance on better interest rate terms, having them sign a new contract which slightly alters the foreclosure terms, insisting they have a lawyer review their mortgage, and then patiently waiting.  Once you end up with their house, and see the tears running down their wife’s face, and see their children put out with them on the street you explain to the jerk-off what his transgerression was in the sole presence of his wife(leave the kids out of it)… 

Or you give him his come-uppance in the parking lot at night… 

The above is revenge, the rest of what you people talk about is therapy.

FuwaFuwaUsagi

What is best in life?  To crush your enemies, see them driven before you, and to hear the lamentation of the women! ...Conan the Barbarian

Thanks Austrailia ---In the Global economy, franchise slaves

Submitted by Guest on Wed, 2007/08/22 - 13:28.

Thanks Australia! It may be that in the global economy, franchise slaves and indenturing will be the norm.
I know our big American franchisors are spreading out all over the world and this ugly practice will spread, as well. Hasn't Quiznos also run into trouble in Australia and Canada.
Mayve, if people like us can talk on a free and uncensored Internet site like Blue Mau Mau, we can spread the word and stop the bastards in government who cooperate with the private interests from victimizing the public and the taxpayers to maximize the profits of big corporations.
You know that the Minister of Industry in the UK was too smart to join ranks with the ZORS and present a picture of government regulation of franchising to the citizens of the UK that would lull them into a false sense of security.
You know that media is also controlled by big money and big corporations and that they won't reveal any of this to the general public. Big money associates with other big money and our elected officials associate with the big money and the dirty secrets of franchising are hidden from the public.

Food franchise data / Australia

Submitted by Paul Steinberg on Thu, 2007/08/23 - 08:13.

Buying a new concept is risky, though there can be advantages to being one of the early franchisees.

If you are willing to wait, there are trade publications which publish sales data on food franchisors. Looking at same-store saled data, there is not good news for the specialty ice cream franchisees, and now I notice that they are now offering pre-packs. Historically, that is not a positive sign for franchisees-- think Carvel, Baskin Robbins, Haagen Dazs.

The Baskin Robbins situation may turn out more upbeat for the franchisees who can convert to the multi-concept sites to capture more of the daypart and more cold weather traffic.

On Australia, there was a grant proposal submitted by Professor Buchan at Univ of NSW to study the impact of franchisor failure on franchisees. Her proposal did not make the final cut, but my understanding is that she continues to work on research into the issue, with a focus on Australia and New Zealand. An interesting side note is the sub-rosa effort by US franchisors and a certain major Washington-based franchisor trade lobby to undermine Minister Fran Bailey's efforts.

123 Quizno's

Submitted by franpro on Wed, 2007/09/26 - 10:40.

Richard,

About 1.5 years ago, I was approached right here in Cleveland by a 123 Fit dude. When he told me that the folks "behind" Quizno's started this one, I got frightened...very frightened.

Franpro 

no it's your tragedy

Submitted by Guest on Sat, 2008/03/29 - 19:45.

franchising is the American success story!

And many

Submitted by Do Diligence on Sat, 2008/03/29 - 19:48.

Thousands of stories of burned zees.

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