The Franchise Owner's most trusted news source

Log In / Register | Sep 2, 2015

Nexsen Pruet franchise lawyers can help you replicate your success smoothly

Comments regarding this article:

Add new comment



Not much to dispute - except IFA backing fraudulent systems

Anyone who trusts the IFA or the Government or their lawyer or their CPA or their children, or their spouse or even their priest is a damn fool. Ultimately you can depend on yourself and your dog - and that is about it.

The problem really is, the failure of individuals to take responsibility for the decision they make and their innate desire lay the blame for poor decisions on the so called experts they supposedly relied on.


If Dunkin' Donuts' board

If Dunkin' Donuts' board hadn't made that change would we franchisees also be roasted for not "doing our homework"? Every system seems to go through its defining moment where franchisees are squeezed and rebel over the the system's purchasing system, product exclusivity, and/or system management. We were lucky. Nigel was the right man at the right time. He showed real leadership and saved the system. Some systems aren't so lucky.

Jim Coen's picture

You are confusing Jon Luther and Nigel Travis

Nigel Travis is the current CEO of Dunkin' Brands.

Nigel was the one that fired Steve Caldeira, Steven Horn, Will Kussell and many more Jon Luther had a deal with Bain Capital to stay until the IPO but Nigel took away his jet, office and secretary.

Nigel turned the "top down bully" management style of Jon Luther to a more collaborative effort of brand employees working side by side with franchisees.

Dunkin' Brands went public, Jon Luther cashed his $50 million check. Nigel runs the show and Jon Luther is gone from Dunkin' Donuts.

Franchisors get the franchisees that they deserve

I have heard Niegl Travis say that more than once. He said it on an interview at CNBC and a few other biz shows that I've seen, and I personally heard him say it a few years ago in a speech he gave at the Multi Unit Franchising Conference in Las Vegas. It created a bit of buzz there, in a good way.

Old Sword's picture

Not much to dispute - except IFA backing fraudulent systems

For almost every one of me there is an accountant and attorney that were also part of the pre-purchase process.  That means for most of the thousands of franchisees that have lost everything there were as many accountants and attorneys that also did not/could not see the fraud because of the lack of disclosure PLUS all the non-disclosure agreements ex and current franchisees sign that make it a civil offense (franchisees can be sued) for discussing the truth.  

Don't take my word for it - read the GAO report on franchising that made it perfectly clear that FIRST YEAR franchiSEE revenue information is need - but not available.  I find it amusing to read comments such as yours that just proves the mindset of franchisors and their apologists.  You don't have to change laws - just have the SBA follow their own Standard Operating Procedures that require steps be taken by the banks when financing these frauds.  Once you require first year and second year franchisee revenues be made public it will stop the bad franchisors from being able to sell their systems.  

You know, the first year revenue numbers that Michael Seid even admitted that if they were to be made public no one would buy the franchise.  Just look at the long list of SBA franchise failure rates and you will get a very strong idea of how many franchise systems would go out of business.  I wonder how many of them are being marketed to veterans for VetFran?  Michael and Steve know, ask them.

Darnelle White's picture

"Franchisors attract the franchisees they deserve"

Nigel Travis the CEO if Dunkin' Brands once said "franchisors attract the franchisees they deserve." 

Jim, that's a GREAT quote. Can you provide a hyperlink to a news piece that reported that quote or if you heard it personally could you provide a little background on when Dunkin's CEO said this? I'd like to use it.

Re: Nigel Travis, reall.

Um, Visitor, you may want to get your facts straight before you post anything again.
Travis. IS the former Papa John's exec that was brought in AFTER the last abusive Dunkin exec ( who caused the revolt and brought in the since bankrupt Kainos gang).

Back away from the keyboard....

Well Jim, there really isn't

Well Jim, there really isn't much to dispute. Most zees work hard for many years, often 2 decades or so as an employee of a medium to large corporation in an industry unrelated to that they ultimately franchise in. During those corporate years they may work and save diligently but they do next to nothing to prepare themselves for the reality of operating a business on a day to day basis. Then toward the end of their corporate career they start looking for a franchise to buy into and effectively toss away all those years, even decades of hard work and savings by failing to truly investigate the franchise and the industry they are getting onto.

It is their fault. I may feel bad for them, but claiming that people like old sword or dippity do were not the proximate cause for what ails them is ridiculous. Contrast that with those who do it right like Beenie.


That is true. If after reading you did not like the agreement you would not sign and the Franchisor would not grow.

What are you trying to say? It makes no sense the way you wrote it. Just don't sign if you don't like it and find one you do like. But everything you mentioned would be there for you to read.

Nigel Travis? Really

Jim, you're actually using a quote from the guy who caused a Dunkin' franchisee revolt, brought in the Kainos Partners as a franchisee partner, and was dumped by the Dunkin' Board for a Papa John's exec when he lost control of the system? Really? That Nigel Travis? Really?

Also, for the Quiznos guy who always has a nasty word about and for franchisees. If Quiznos franchisees were so dumb and Rick Schaden so smart why did Rick try to open 600 corporate restaurants using his own and other investor dollars? Of course the effort failed after a handful of Grand Openings and millions down the drain. Unless Rick didn't invest himself after all and took the "smart money" for big money. The lawsuit against Rick is going to be must see TV.

It's always easiest to blame the weakest when there is a big problem that needs to be addressed. Unfortunately for franchisors in this case no one who matters is buying in. State legislatures are going to over regulate the industry and make it easier for franchisees to have their day in court and win because franchisors like Schaden/Quiznos were too greedy and the reputable franchisors were too timid to speak out and showed no interest in self-regulating the industry.

And for the current/ex franchisee or employee who posted below. Please make your points without the follow the buzzards thing. It's not necessary.

To the rogue operators like

To the rogue operators like Rick Schaden, Quiznos, and others it's always the victim's fault. They were supposed to know that Quiznos was a rip-off investment, that they should just assume that everything said about the system was an out and out lie, that no matter how much time and money was spent on investigating Quiznos it wasn't enough, that Rick was essentially building his multi-million dollar retirement by sucking the life savings from thousands of hard working investors, and that those who accumulated the wealth necessary to open a franchise are actually the dumbest, laziest, greediest people who ever lived.

That argument has been around in one for or another for years but it's actually Schaden/Quiznos that fit the description below. Lazy and greedy and ruthless enough to destroy thousands and blame the franchisees for it. Now they face bankruptcy and lawsuits. Couldn't happen to nicer people. Follow The Buzzards

Jim Coen's picture

The scary thing...many franchising advocates agree.

I think I've seen this list before, maybe from the book "Franchisees are Dummies".

You would be astounded how many people in franchising even with CFE after their name, actually agree with the above list. There is a saying in franchise sales circles "does the franchisee pass the fog the mirror test, when you put it under his nose? If they don't punch them in the stomach and they'll fog the mirror".

The summary is straight from franchise advocates (even attorneys) talking points: "it is almost always the franchisees fault because they failed in their due diligence."

The FDD contains all the information, therefore if you read the FDD you would know that, it contains cross default clauses, no renewal, the franchisor's right to markup everything you are mandated to buy, that you can't buy another franchise, you can't associate with other franchisees, they have right of first refusal, you have no notice to cure a default, you are bound by the operations manual that the franchisor won't show you that until you are "approved to be a franchisee", you have no succession planning ability, that essentially you are renting the business and have no right to remain in the business after you exit the franchise.

These are all srandard clauses you see in any business contract right? Not.

Why would anyone expect someone to sign an agreement that contains such onerous clauses?  

Nigel Travis the CEO if Dunkin' Brands once said "franchisors attract the franchisees they deserve." 

naw...but nice try

The biggest threat to the average franchisees is still the franchisor.
Nope, not even close. the biggest threat(s) to your average franchisee are themself.

01) They tend to think they are smarter then the other guy
02) They tend to be greedy and envision not working after a few years while employing others at slave wages so they can live the good life
03) They tend to be too cheap to pay for appropriate do diligence
04) They tend to be dishonest
05) They intend to open a franchise and flip it to some sucker after only operating it for minimal time, so they never actually research their build out cost or their local market.
06) The tend not to be adequately prepared to be small business owners
07) They tend to have no experience in the industry they are attempting to franchise in
08) They don't grasp the easily understood fact that they do not own the business
09) They tend to think employees should just be lined up to work endlessly for them at slave wages
10) They can't identify the USP of the franchise they are buying into

In summary it is almost always the franchisees fault because they failed in their due diligence.


Screwed The IFA. By tolerating the Rick Schadens and Quiznos of the world and not policing its own members franchisors will see governments do it for them. Not what most franchisees originally wanted but when rogue operators are able to bend franchisees over with impunity eventually the swelling number of q-screwed voices become more important to politicians than the campaign contributions. So look in the mirror or fly to Denver and vent. Either way I've got some Bad News. Meet your new boss because for franchisors These Are The Good Old Days. Follow The Buzzards.

Bull crap


Great work

GOOd Job............

Higher Wage Costs Important But

The biggest threat to the average franchisees is still the franchisor. Rogue operators like D!ck Schaden, rogue systems like Quiznos chew up and spit out thousands of hardworking franchisees every year. Any bill that strengthens the franchisees' position and voids the one sided contact provisions that leave franchisees no alternative but to be fleeced and have to walk away and declare bankruptcy should have the support of every franchisee and franchisee association. With a strong stance against the rogue operators the IFA would get support from many franchisees in efforts to stop industry regulation. But by turning a blind eye and even giving tacit approval to the Schadens of the world they've left franchisees no recourse but to look to government regulation and the courts for relief.

IFA will...

have some long faces tonight. The suits and the Caldeira thugs will have a long plane ride home.

California Franchise legislation

Go franchisees! Nice to have cooperation and not spiteful sniping between franchisee groups this time. Let the IFA do its own work of trying to divide franchisee groups.

What a breath of fresh air! Well done!

Alternate: Live listening to Calif. SB-610

This is a link to just hear the live Webcast of SB-610, here.

The volume for the video stream seems a little low.

11 a.m. PDT, the SB-610 part of the hearing is now finished. BMM is waiting on the final vote tally.

1 p.m. PDT, June 24 -- It looks like the bill passed the Committee. Final vote was 9 ayes for SB-610, 2 nays and 3 abstains. Assembly member Brian Jones (R-Dist.71) and Brian Meianshchein (R-Dis. 77) voted against the bill.

The bill will be heard in the next few days in the full floor of the Assembly, where it is expected to pass. However, fierce lobbying by the International Franchise Association is expected at Governor Jerry Brown's office to stop SB-610.

5:30 p.m. PDT, June 24 — Final tally on the vote is now known. 10 voted yes for SB-610. Two Republicans voted against the bill. And two assemblymembers abstained.

"Fair franchising" will lead to higher labor costs

How do franchisees who are involved with AAFD, AAHOA and CFA feel about the SEIU's interest in this legislation? To what end will these take the "fair franchising" crusade to justify their existence? Do they really believe that allowing the unions to get into their businesses will improve their relationship with their franchisor and be more likely to succeed?