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Who Should a franchisee hire to do due diligence?
If Joe V.P. is coming out of the corporate world, and wants to open a franchise in a field in which he has not experience, what sort of consultant should he hire to assist him with due diligence?
- forums:
Franchise Registry's Seal of Fair Agreement
There is something called the Franchise Registry by the Small Business Administration that Joe V.P. can use. According to the site, franchisors fill out some sort of centralized form in which SBA lenders find the information useful and convenient. "Small business owners get better service and quicker loans," says the site. Besides the purpose of having franchisors fill in complete information in a standard form to expedite the loan process, the franchise registry's main benefit is: Does this mean that Joe V.P. can now spend less on franchise agreement due diligence? This sounds definitely like a seal of approval that the franchisor terms are not too oppressive to franchisees. Heck, who needs to look at the AAFD's accredited franchise agreements? The SBA's franchise registry has many more franchise brands in many more sectors than the AAFD. Just one question - who in the SBA is actually going through the franchisor agreements to make sure they are fair? Is FranData doing this? (They are mentioned on the bottom of the front page.)SBA Registry
You have misunderstood the SBA Registry. It has nothing to do with fairness of the underlying franchise contract. Franchisors in the SBA registry have applied to the program and provided evidence that their franchisees are eligible for the program.
Michael Webster, a franchisee attorney in Toronto, Ontario, who publishes a website on business opportunities and franchises, called "The BizOp News"
Joe VP should....
get in the Internet and search Franchise Due Diligence. He should then go to the websites that are turned up by that search and satisfy himself which suits him best. He should then visit with that person/those people, and make up his mind who he wants to work with.
He should exclude anyone who is paid by a franchisor and he should know that there aint no free lunch.--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
The victims are getting angry!!
From reading on BMM there are so many complaints from zee's. Isn't it proof enough that something is wrong out there. A guest replied to my comment about killer dd. They said you only need about two or four weeks to do dd. What does that tell you? People do not understand the serious committment of buying a zee. We took longer to do dd. We still got fleeced. The only solution is to never never buy a zee. Besides it isn't your business. So far I have read so many complaints against most of the franchises. Why would anyone trust a zor? I am not bitter. Just hurt that so many people are being hurt.I just saw on the interenet
an article of a new 123 fit couple opening with a great view. This is living proof that people don't do dd. They did the circuit we had and it does work. But the business side doesn't work. The proof is in the UFOC that was disclosed in Jan. 2007. 22 stores closed. To date over 30 have closed. I know they are basing their decision on their area director. Which was our area director. He does have one of the few successful clubs. But he bought his club that was an existing club. Second generation of a zee has a better change of making it because he doesn't have to do the build out. I wish them well but if I could talk to them I would tell them the truth. We never included people on our hold list because they weren't paying members. The people opening this new club are very intelligent educated people. They just don't understand what killer due diligence is. I wish them well but if they are like the most who opened I feel sorry for them.Joe VP should do the investigating firsthand for each concept
hire a competent franchise attorney and if he can't do the financial analysis himself hire an accountant as well.
Most due diligence is common sense and research.
The Truth Shall Set You Free!
TIF
Bogus info from Do Diligence
Just thought I would correct some of the bogus claims you are making about your previous Area Director and his location. In the future, please do not spread what you percieve to be the truth without performing your own due diligence. You stated the following: "He does have one of the few successful clubs. But he bought his club that was an existing club. Second generation of a zee has a better change of making it because he doesn't have to do the build out." The above is incorrect. He did not buy an existing club, rather he bought the original franchise and paid for the entire buildout under a different name. When they were bought out, he had to pay once again to update his location to meet the new standards of the organization. In short, he had to pay for TWO build outs in one location. He is not a second generation zee, but the original one. Despite this, he continues to operate his club going into his fifth year of business. In spreading false information it becomes hard to give you any credibility in anything you post. I also heard that you were offered a buyout opportunity for your club from your Area Director, but you chose to close instead. Why wouldn't you allow your Area Director, whom by the way you think only wants to sell, to purchase your failing franchise? It seems to me they were willing to give you a way out and you chose to ignore it and go your own way. You could have minimized your loses. Best of luck in the future. SBJGuest what is your
credibility? Are you from corporate? Register so we can have an idea who we are talking to.Reply to "Guest what is your"
We are both very credible and NO we are in no way, shape or form related to anything corporate 1-2-3 Fit or other 1-2-3 Fit. We have spoken with most owners in our UFOC and visited a few clubs. We are in the process of searching out a franchise, and happen to know one of the owners who is successful. Yes, as an area director they want to sell, but this owner also runs a franchise. We know that there is an owner in Eastern WA who runs a Quiznos, 1-2-3 Fit, and is an area director as well as corporate Regional Franchising Director. Too many hats for one to wear at once. Registering with a made up name like "Do Diligence" is not going to give anyone an idea who you are talking to. Call us SBJ. SBJ123 fit and Quiznos
are the same people. Are you out of your mind? Quiznos that has thousands of people after them. Do your dd on Quiznos. Study how they build their empire. 123 fit will follow in the foot steps, hurting many people.. I don't believe 123 fit will be successful because selling subs and the fitness business are two different things. It is like saying I opened a successful sub joint up now I can copy-cat Curves, (who is having problems now.) Ray Wilson is one of the reasons we bought. Only to find out he left the company way before we signed the agreement.. Do you honestly think we would buy a fitness center with nobody who knows how to promote a fitness business. They talked to us like Ray Wilson was still there. That is misrepresentation. If you didn't know this, Ray Wilson is an icon in the fitness business.Reply: 123 fit and Quiznos
Check out the following franchise: www.smashburger.com Sounds like an interesting concept. Don't know much about it, but it is new and growing and highly praised in the local media. Good deal or bad deal? Who knows, too early to tell, but one to watch for sure.123 fit and Quiznos
was praised from the media too. Have you not read all the horror stories? I have been told by many franchise lawyers anything to do with the leaders of Q is bad. Smash Burger has already been discussed. Stay away from the fitness devil, sandwich devil and burger devil.
Haven't you heard of at least 4 suicides connected with Q? Haven't you heard people saying how ironic it is that they are giving to the homeless and making other's homeless?
You must be from corporate.
Reply: 123 fit and Quiznos
You certainly hold nothing back in how you feel. We only mentioned the name and you begin to attack us. We stated in our posting that we do not say it is good or bad. Just thought we would get some feedback. Don't attack us. See the world through the eyes of compassion. Forgive everyone, embrace all, and allow others to be exactly who they are. You can't change them anyway.If your family was hurt
financially you would not be talking like that.No attack
Just facts.When it comes to people getting hurt
I am very passionate about exposing the reality of the dark side of franchising. Not all franchisors are bad. I know what I know first hand. I just want to stop people getting hurt from bad zors. In history there are stories of many bad people who purposely hurt others. There is a reason for all the lawsuits with Q. They are known as one of the worst in the industry.Do Diligence
Yes or no, (one word answer only, please) Were you or are you a Quiznos franchise owner?I don't comply to
guest request. Unless I know you.Do Dil where for art thou?
How come you don't respond? We are anxiously awaiting to hear from you. Please don't keep us waiting any longer.Register
It is hard to have a conversation otherwise.Reply
Why dont you want to share with guests? I thought that is what you were here to do. You are a liar then. Nobody knows who you are. We are SBJSBJ
Could stand for Silverdale, Brain and Jason or Smith Brooksey Jo ( CEO's wife's middle name.) Nobody knows who you are too.
Everything I have said on this sight is the truth. Information given to me by former area directors, former zees and existing zees. Is everyone liars except you? All I have written on here is everything I would say in court under oath.
reply to "SBJ"
You sound like a stalker, claiming names and middle names of CEOs wifes etc...
Scary to say the least.
Perhaps Do Diligence, you would be best served as a private investigator. You could become a master franchisor and sell franchises and do all the due diligence yourself to ensure that they all did their due diligence before you sell them a franchise.
You missed your calling!!!
General Fran -
No but I might as well been
I am among many people who have been hurt by the same people who started Q.Reply
Why are you so down on all franchises??? Surely there are good ones.If you read closely
I am not down on all franchises. With 800,000 franchises out there. There must be some good ones. You have to admit there are sharks out there. The one-sided UFOC/FDD appeals to sharks. They can legally rob, steal from the good people of our country that has worked all their lives, building and building and being responsible adults. To be taken advantage of by sharks. Having to live in poverty in their older years because of greed. Thousands of people are suffering. I have talked to many people not only in our franchise but other bad companies. .I have no idea who SBJ
For all I know it may be Brooksey Smith, CEO of 123 fit.Buy Buy Buy.
you know what's best for you. Don't listen to all these folks with their personal experiences with the very franchise you are researching. If their story differs with your emotional attachment to the franchise, then ignore those folks!!!
You need to sign a check and sign one right away. Leverage your home equity to make it happen. Doesn't matter when you're sitting on a cash cow, right?
you should consider an area development agreement -- the more of your cash you can give the franchisor up front the better.
doh.
Reply to "Buy buy buy"
Fortunately for us we are only in the investigative phase and didnt just jump in like some of the unfortunate posters here. We are happy to report we have done nothing with this or any other franchise. We won't until/if we are 100% confident, which we may never be. We appreciate all the information shared. As for Do Diligence, the answer is very clear. You need to let go of everything that no longer serves you. How long must you carry the burden of the mistakes of your past? SBJIt has only been alittle over
three months. How long do you think it takes to get over being robbed?It is hard to let go
of a life time of hard work, with success behind it. This was the worst decision we ever made.My intentions are good
I started writing on BMM to learn what happened to us. I have learned and it has been very hard to accept. Warning people about the steps they need to do to protect themselves from sharks is honorable. Financial hell is unbearable and I would not wish that on anyone. Not even you.Bad, Bad and Bad
Sleep Tight writes: "doh."
I liked the post, but it would have been more effective without the revealing ending. Perhaps a link instead to John Hayes article on 5 myths?
Michael Webster PhD LLB
Franchise News
Bogus info
He had to build out twice!!! Oh, that poor man!! I am sure he spent sooooo much to slap some paint on the walls and a stripe in between the 2 colors of paint. That must of set him back a ton of money. Or my guess is he has become 123 fits "yes, man". That means do as they say and he dont have to pay. I believe the name for that area director is "kiss ass". As for your comment on "Buy out". You really do live in fairy tale world. 123 fit does not buy anyone out. That involves real money. They dont even pay their own debts so you really think they are going to buy a club that is not succeeding. Highly undoubtful. They like to slide in when the franchisee is out of money, desperate and trying to figure what to do. Then they want the franchisee to think that they are doing this for them, to help them...when really they just want to assume everything at no cost and definitely not commit to anything in writing. Thats only because when 123 fit corporate fails and the club still cant make it.. they can slide out and stick the poor franchisee with more debt. Just ask the 2 California clubs they did that too. 123 fit are snakes. When they left one of the clubs they stole the sign. Do tell us SBJ if 123 fit is so successful and offer buyouts to clubs...why have over 30 closed and they only 19 which are opened. There are only 3 over 500 members. The other 16 have 400 and less and struggling. Why didnt 123 fit "buy out" to offer them a way out? Lets face it 123 fit sucks, it is a failing franchise, and Brooksy Smith dont have what it takes to make it successful. And I am sure it eats at him because he cant be top dog like the low life Rick Schaden is with the Quiznos rip off franchise. HLCReply to "Bogus info"
He had to build out twice!!! Oh, that poor man!! I am sure he spent sooooo much to slap some paint on the walls and a stripe in between the 2 colors of paint. That must of set him back a ton of money. Reply: Painting a large club with 25 foot high walls is not a cheap task, nor is the desk, check in area, 1-2-3 Fit Store sign, open sign, 30 minute sign, artwork, table, chairs, cubicles and merchandising unit, bench cushions...etc... It adds up, especially after paying to do it once already. Far more expensive than one buildout of a smaller club, guaranteed. Do tell us SBJ if 123 fit is so successful and offer buyouts to clubs...why have over 30 closed and they only 19 which are opened. Reply: The Area Director, not corporate offered to buyout the club. Many clubs closed because they didn't have the funds allocated to go the distance to build the membership to profitable levels. There are only 3 over 500 members. The other 16 have 400 and less and struggling. Why didnt 123 fit "buy out" to offer them a way out? Reply: If clubs have enough working capital, they can weather the time until they breakeven. Who said that a business is profitable in less than one year. On average it takes 3-5, and the capital to last that long. I only know that the Area Director offered to buy out the club, I do not know if corporate ever made an offer to any club or not. Lets face it 123 fit sucks, it is a failing franchise, and Brooksy Smith dont have what it takes to make it successful. And I am sure it eats at him because he cant be top dog like the low life Rick Schaden is with the Quiznos rip off franchise. Reply: Time will tell. For those already in, best of luck to you. SBJMaybe if they didn't
gouge people from the beginning things would of worked out. Come on $3500 for a coach station. $1995 for a clockman mascot? Are you kidding all the former zees? We have brains also. Maybe you don't think so. Afterall it is the Quiznos way. 123 fit is the illegimate child of Quiznos.That is not me writing below
123 fit has hurt so many people. People are suffering because of greed. They did not inform us about anything. Schaden started this with Brooksy Smith. Just another way to take from honest hard working people and put them in desperation. You can say it is our fault yet they misrepresented all of us. Yes we have evidence of all the lies.
When franchisors do this it is unethical and they do not care who they hurt. They just want your money.
If we took the managerial contract it would of not changed our situation. We take the risk and that is how the Quiznos, 123 fit world builds their empire. Anyone with any conscience would never do this to people. It would never enter my mind, ever.
I did my DD
1. He bought an existing club. Members were there before he opened a 123 fit.
2. His father finananced the club. (Makes a difference)
3. 2 build outs. I don't believe. Until I see proof then we can talk about it.
4. He has more equipment than any other 123 fit. Some equipment is from the original club.
5. From reliable sources in the company they claim he actually has 2 circuits instead of 1.
6. He claims he looses 300 members whenever a ship sails out. We, (former zees are still waiting for that ship to sail out. Never saw him loose very many members).
7. After doing my due diligence about managerial contracts I discovered people were screwed over even more. In the managerial contract we were to be paid $75,000 after a year. We take all the risk. If they decided to take it over, (IF) then they would pay us.
8. This is information from all former zees with 123 fit.
9. I could not promote a brand that hurts so many people. Therefore how could I trust them?
10 Minimize our lost? What a joke. We lost the minute we decided to go with an outfit that is associated with Quiznos. I am sure many Quiznos people would back me.
11. Why would you want to do business with people who hurt you once. You know the old saying, "Hurt me once it is your fault. Hurt me twice it is my fault."
Reply to "I did my DD"
1. He bought an existing club. Members were there before he opened a 123 fit. Reply: He started the original club under the name Healthy Exercise with 0 members, then changed over to 1-2-3 Fit. He grew the entire membership from 0 members. 2. His father finananced the club. (Makes a difference) Reply: He financed the club with his father as a partner. (Regardless of the financing, there were still bills) 3. 2 build outs. I don't believe. Until I see proof then we can talk about it. Reply: Believe it. Do you actually believe corporate would pay to switch over a club? 4. He has more equipment than any other 123 fit. Some equipment is from the original club. Reply: He built his membership on old crappy equipment which is much inferior to the new Lifetime Fitness equipment 1-2-3 Fit uses. Amazing he can sell memberships with inferior equipment. 5. From reliable sources in the company they claim he actually has 2 circuits instead of 1. Reply: I have been in the club and there is only one (1) circuit, not two as you claim. 6. He claims he looses 300 members whenever a ship sails out. We, (former zees are still waiting for that ship to sail out. Never saw him loose very many members). Reply: I asked him about this, and it is true that he looses members whenever ships leave port, however, he gains them when the replacement gets there. Whenever one leaves, another takes its place. This results in a washout as far as members go. 7. After doing my due diligence about managerial contracts I discovered people were screwed over even more. In the managerial contract we were to be paid $75,000 after a year. We take all the risk. If they decided to take it over, (IF) then they would pay us. Reply: Why wouldn't you just take $75K and at least get something? Your call. 8. This is information from all former zees with 123 fit. Reply: I went directly to the source. He is honest about answering questions. I suggest you speak directly rather than rely on second hand information, as it is clearly wrong much of the time. Do your due diligence!!! 9. I could not promote a brand that hurts so many people. Therefore how could I trust them? Reply: Perhaps you never will. Again, your decision. 10 Minimize our lost? What a joke. We lost the minute we decided to go with an outfit that is associated with Quiznos. I am sure many Quiznos people would back me. Reply: I have no comment on this one, as I claim ignorance. 11. Why would you want to do business with people who hurt you once. You know the old saying, "Hurt me once it is your fault. Hurt me twice it is my fault." Reply: I wouldn't want to do business with anyone who hurt me.Now I'm back on my
computer. Sorry I just got frustrated I do care. All I know is from first hand experience with this corporation. I have studied and investicated and if I knew what I knew now I wouldn't have anything to do with them or anyone who is associated with Quiznos. Just go through the internet and you will find horror story after another.
They gouge their people from the beginning. They will take advantage of anyone they can. They took advantage of us. My husband and I are not the type of people to hurt anyone to gain a buck. If you don't believe me and want to believe the person you talked to that is your right.
Talk to all the former zees. Can all of us be lying and that one person you talked to be the only honest person. Talk to the very first 123 fit people and then everyone that had a 123 fit. All their stories are consistant and they wished they never heard the name. We all feel that way. They sold many clubs. Where are they? That is also part of DD.
He bought an existing club
Are you that naive to believe an existing club has no members? More than one person told me he had more machines. Plus he got the equipment from the study with ACE. He has a charming personality. Yet I don't believe his disclosures because he is into selling franchises. Not seeing them succeed. Frankly guest I don't give a damn! DDReply "He bought an existing club"
"Are you that naive to believe an existing club has no members?" Reply: He didnt buy an existing club. He started the original club with 0 members. It was called Healthy Exercise. "More than one person told me he had more machines. Plus he got the equipment from the study with ACE." Reply: He does have a few more machines, which cost more money in a larger space which requires more rent and utilities and CAMs. Yes, he told me he got the equipment from the ACE study, but not for free. "He has a charming personality. Yet I don't believe his disclosures because he is into selling franchises." Reply: He may be into selling franchises, but he owns a franchise and has for more than four years now. He should know better than anyone how to be successful. Even more than corporate I would believe. "Frankly guest I don't give a damn! DD" Reply: I believe you don't give a damn! It is precisely this attitude which may have cost you your club!!! Did you ever think of that!. Our search for answers continues. To buy or not to buy? That is the question. SBJWhile in business
I had build many good relationships. When you feel you were lied to and robbed it is hard to be on the up beat. Which is my personality before all this mess.
I don't give a damn about the corporation filled with snakes. Why would I? They hurt our family with misrepresentations from the beginning.
Don't give a damn
It is frustrating when people can't see facts before their eyes. I say go ahead buy a 123 fit and remember what I have been trying to tell people. Buyer Beware.
Remember in order to buy a franchise you have to be successful. They do not go after people with no money. To save you from all the stress of opening a club just hand over your money and say bye, bye.
I got my information from very reliable
people. Who never would lie to me. Unfortunately he has mislead me to believe things that I later was flat out lies. If you want to open a 123 fit do it. Just don't come back and tell me what a bad decision it was. If it so great an investment why are they changing everything. Why are so many clubs closing. Take the $75,000 after a year. Do you not get it? We still take the risk. If they decided after year they didn't want it they could walk away and we would be in the same position. After the horror stories about managerial take overs some didn't pay the rent. Again you have to investigate and have him give you the receipts of his two build outs. I bet you anything he wasn't gouged like us. Do DiligenceRe: I did my DD
Hmmm whom do we believe DoDil or the guest? This is a very difficult situation. We have on the one hand DoDil who is prone to histrionics and on the other a guest poster with some 123Fit, Curves and industry knowledge who could also be a 123Fit employee or insider.
Holy dilemma Batman?
The Truth Shall Set You Free!
TIF
Darth
Explain histrionics you arse.Re: Darth
The Truth Shall Set You Free!
TIF
Darth
If everyone had no emotions the world be no fun. Yes I am emotional but if we were all like you no one would have any fun. Plus you wouldn't have anyone to pick on.
Re: Bogus info from Do Diligence
Holy Cow, DoDil say it isn't so!
Here is your chance to set your record straight.
The Truth Shall Set You Free!
TIF
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