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Protection? Nope

Unfortunately, there isn't protection for franchise owners against franchisors that keep to themselves important information. That is typically not illegal in the franchise to franchisor relationship, or even a breach of your franchise contract.

If the information in the FTC's franchise disclosure document is incorrect, there also is not much you can do to make yourself whole. A franchise owner has no private right of action, which means that all an owner-operator can do is hope that the FTC may take some action with the franchisor to correct the false Franchise Disclosure Document information. However, that is entirely between the FTC and the franchisor. It is none of the franchisee's business.

It is in the self-interest of owner-operators to perpetuate this system. When exiting their franchise, most franchisees will want to keep those ugly things hidden from a buyer who kicks the tires of their business.

After all, if it were you, would you want to leave the business penniless and with a mountain of debt, or with $200k in your pocket?

A Franchise System that has a high failure rate

What happens when a Franchisor has a very high failure rate but doesn't publish it - when their model is such that $25,000 in monthly revenue allows you to barely cover your costs (which all go back to the Franchisor) - it there ever any real protection for the hundreds of franchisees that have left this system deeply in debt and bankrupt? The Franchisor appears to tell everyone they just are working hard enough, but our market is local businesses that barely have enough to keep the lights on, let alone pay for our services.

Everyone of us has to deal with the same challenges with customers and the Franchisor continues to make their money. We're more indentured slaves that have put up their life savings to make a go of a business that has an 85% failure rate.

Any protection against that???

Other Laws Protecting Franchisees and Distributors

State general franchise relationship laws are critical to resolving franchise disputes in states where such laws have been enacted and apply to the franchise.  However, also keep in mind that even in states where there isn't a general franchise relationship law, there may be industry specific laws that provide comparable protections.  For example, while Maine does not have a general franchise relationship law, it has a statute that specifically regulates the treatment and termination of distributors of power equipment, machinery, and appliances.  Similarly, many states have laws protecting farm equipment dealers, and many states have "ABC" laws regulating relations between brewers and beer distributors, etc.  

Ray Borradale's picture

We waited

We waited until the Italians came to Australia to build the place.  Long before my time but they tell me it was hard work watching. The first kick in the butt I ever received came from an Italian fruiterer who could run a hell of a lot faster than he looked.  Ahh the things you try to get away with in your 40’s.

RichardSolomon's picture

An attoney is an Italian attorney. Everyone but you knows that.

Don't y'all have Eyetalians in Australia?

Ray Borradale's picture

What is a lawer, is it an attoney?

Excellent link to a site selling franchises where the broker doesn’t have the courage to name brands.  This moron cannot spell lawyer and professes to be an attorney. Big words are tough but come on.

This is the type of come-in that only fools go for. My suggestion would be for any franchise buyer to AVOID this site and anyone associated with it. Franchise For Sale | Information on Franchises and Business Opportunities

 It is absolutely essential

 It is absolutely essential that consumers be protected by state laws after they buy a franchise.  Wrongful termination of a franchise agreement is unacceptable.  The more resources that franchisees have to fend off such violations the better!

That's Right!

Next DDIFO is now tackling the issues on a Federal scope with the introduction of the Universal Franchisee Bill of Rights. We'll make sure every DD franchisee is protected! Only a few brave and courageous men are capable of gathering support against IFA movements in Rhode Island shot down. We'll soon support GA once membership numbers improve.

For now, gimme a "D"!, gimme a "D"!, gimme an "I"!, gimme a "F"!, gimme an "O"! - go D-D-I-F-O!

Rhode Island also has such a law

It was widely reported on Blue MauMau and is loosely based on Wisconsin's law.

After passage, the IFA and some of it's members, mostly Dunkin' Donuts (then in the process of vigorously suing hundreds of it's franchisees to get their businesses for free)' tried to have it repealed.

DDIFO, the Dunkin' system's independent franchisee association, fought the repeal successfully and negotiated an amended law that all seem to be able live with a few years out. Courageous given the raft of litigation against franchisees for allegedly trumped up charges-some brave souls volunteered to speak at legislative hearings, knowing putting their own franchises at risk. Bravo!

The IFA's threats of having it's franchisor's pull out of RI seem pretty silly and low right now, don't they?