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toolsIn Paris I Chose a Franchise, Lollipops
I came to the Paris Franchise Expo to find a franchise to remember. Frankly, it is difficult choosing between some 450 exhibitors from 75 industries.
I could have chosen industries with the highest growth rate in the latest years, such as Real Estate with its 30% growth of the number of franchised units (Europeans don't peek across the ocean to see what's going on now in real estate?) or personal services, with a growth of 50%.
I chose a typical French business: fashion industry (Paris – fashion capital of the world), a medium sized franchise in full process of developing - Lollipops Paris , manufacturer of accessories for women (bags, shoes, belts, hats, jewelries, key-rings). They create 4 collections/year and more than 500 original items. Lollipops is "a Parisienne brand, aiming to provide women with an image full of glamor, feminine, amazing, mischievous and playful - a perfect girly panoply", according to the Creative Director, Marjorie Mathieu.
They are 90 shops under the brand Lollipops opened in France and in 21 foreign countries.
In France, 50% of the shops are company owned, and 50% are franchises. Abroad, most of the units are franchised. 80% of the production is for export, to countries like Italy and Spain, UK, Sweden, countries in Eastern Europe, Middle East, Asia, North and South America. "We are planning to open 6 new units in France and 25 abroad this year", says Yann Ducarouge the General Manager of Lollipops.
The start investment is of $110,000 USD, including the Franchise Fee of $18,700 and the first stock. The rent for the almost 430 square feet location is paid separately.
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Related readings:
Lollipops for Suckers or for Winners? --in Paris
French franchisors really captured the regulators! They only have to report to the public the status of their Network for a period of one year. They can really spin and win and turn and churn and pump and dump to attain visibility on the backs of franchisees.
These Big Shows with all the hype gather the cheap venture capital and the cheap labor of franchisees who are hopeful that they will realize their dream of a business of their own by becoming a part of the "adventure" of the franchisor. The franchisee, of course, doesn't realize that they will take all of the risk to go on the adventure --that they will provide cheap labor AND the capital to finance the adventure.
I had to laugh! Those consultants who help the franchisors to franchise their business concept loundly proclaim that "the entire process can be accomplished with no financial risk on your part" and they indicate to the franchisor that "your share of the program becomes a valuable, marketable asset."
Franchise contracts are written with the view of securitizing the franchise agreements if the adventure takes off. Even the Landlord gets to securitize the lease of the franchisee if he is so inclined.
Those clever rascals! Franchisees of the World! Unite! Spread the word! Buy your suckers wholesale; suck them at home! invest in your "own" adventure if you must and really own a business of your own.
A franchise is a wasting asset because of the finite terms of the agreement and you OWN only your debt, while the franchisor owns you lock, stock, and barrel under the one-sided, exploitive franchise agreement. Franchise contracts always contain disclaimers from the franchisor that there will be success and profits for the investor franchisee while at the same time, franchisors hold up a success right before the potential franchisee's eyes and use the carrot of success and profits to lead the mark to sign the boilerplate contract. Make the franchisor prove the success by asking him/her what happened to all of the other investors in their concept and then make them prove it. Get it in writing!
LET THE BUYER BEWARE! Read NOLO in Forbes.com "Ten Good Reasons NOT to Buy a Franchise" and believe it!
Lollipops
Eugene, You are no stranger to investing in franchises. As you note, there were so many concepts for you to choose from. Can you tell us more about what got you interested in buying a Lollipop clothing franchise for Romania?
Just lookiing on the surface (Readers: This is not an endorsement), the fashion chain of hand bags and fashion accessories looks cute. I can see the concept catching on in major Asian and European cities. If their fashion catches on in Tokyo, one of the more homogenous and richest markets of the world, the world's second largest economy could easily dominate the small chain's revenues from the rest of the world. To really catch this trend on fire, they should look at New York, Milan, London, Berlin, and the small but influential Asian markets of Hong Kong and Singapore.
From a franchise operational point of view, the problem for Lollipop will be how they can support being so spread out, with their few franchised shops in such different retail and business environments.
Regulators of All Countries, Unite
Generally speaking you seem to be quite upset about this whole thing that franchising is.
It is true that the European regulations are more relaxed than in the US.
But think about it: An European franchisor selling in the States must abide to the UFOC. In counterpart, an US franchisor selling in the EU takes advantage of the local regulations.
Thanks, Eugene! ZORS ALL OVER THE WORLD
"The thing that franchising is" as you say. A franchise is NOT a business of "your own" and even the SBA Advocacy Committee tells our Federal Trade Commission that a franchisee is NOT an entrepreneur and really doesn't own a business of his own. It is the franchisor who is the entrepreneur and the franchisee is merely a resource of the franchisor. If there are no profits, the franchisee is an indentured servant of the franchisor or a financially dead victim.
I have thought about it, and I think that franchisors, with the help or without the help of government regulators, all over the world are taking advantage of franchisees by disguising and hiding the KNOWN risk of the investment in a franchise from the first owners who labor in and finance the build out of the physical units.
Re: Thanks, Eugene! ZORS ALL OVER THE WORLD
I'm sure that all McDonald's franchisees as well as thousands of other wealthy franchisees agree with this terrible, terrible, terrible franchise thing... taking advantage of... disguising and hiding...
Dear guest - please do not be angry - humans did not invent (yet) better system than free enterprise with all the consequences.
PS - I'm not a franchisor of franchisee, just businessman
Thank you, Mr. Businessman, for
some sanity.
Perhaps these folks should stop trying to pretend to be entrepreneurs or care if franchisees are entrepreneurs or indentured servants . . . if more of us were bbusinessmen and women, acting responsibly, more of us would be profiting from businesses, including franchises.
At least this provides some entertainment . . . it reminds me that in America, the greatest country in the world, there are all kinds of folks, some who know what they're doing and talking about and a whole bunch who do not.
And a site like this is good for their venting.
Long live free enterprise and franchising!
Free Enterprise doesn't mean freedom to Hide Risk
Free Enterprise doesn't mean freedom to hide and obscure the material risk of the investment as demonstrated by the success or failure of franchisees on a unit basis!
Free Enterprise doesn't mean that franchisors should lure potential frnchisees into unbargained and take-it-or-leave it contracts under cover of government regulation.