10 Easy Ways To Scam Prospective Franchisees - A Franchisors Guide
2) Use the old sales trick of creating artificial demand to get them to sign up. You know - the territory they are interested in is likely to be sold to someone else soon. Grab it now before it's gone.
3) Oversell the income potential of the franchise. Use the standard way of showing income potential in your prospectus that doesn't match up to reality. Trust that the possible franchisee will be too well-mannered to actually ask the current franchisees what they earn.
4) Point the possible franchisee at your stooge or 'pet' franchisee when they ask to speak to a current franchisee. Try to avoid giving them a full franchise list, or if you have to, make it difficult for them to contact all the franchisees
5) Ensure that the current franchisees know that they'll be sued for breach if they don't toe the corporate line when approached by prospects.
6) Make sure that the franchise fee structure is as difficult to follow as possible. Keep a few stingers in the background, like a structure that operates on a ratchet effect. When turnover reaches a certain level the fixed fee goes up, but can't go back down again even if turnover falls. After that point it doesn't matter how badly they do - you still get your income! Neat!
7) Keep your subscription up to all the franchise associations. Franchise buyers place an absurd level of trust in the fact that you are a member. They don't realise how easy it is to get in and how conveniently hard it is to get thrown out.
8) Dress your prospectus up to look as professional as possible. Remember a glossy magazine creates the impression of a huge support network and great wealth. Just what you want those franchisees to think.
9) Emphasise the 'support' that franchisees will get, but don't be too specific about what form that will take or how many actual visits the franchisee can expect. After all the idea is to create obligations on the franchisees part, not yours!
10) Ensure that the termination clause for franchisees is really expensive. Better still leave it out of the contract all together! It's the last thing the franchisee is interested in when they sign up - after all they are going to make money, who wants to be bothered with what happens when, sorry, if things go wrong!
OK the above list is a little tongue in cheek, but I've seen examples of all of these dubious practices (and a few more besides). Not all franchises are guilty of these deceits, but it wouldn't be a bad idea to be aware that they exist.
Franchisees be careful. It's jungle out there!
Related Tags: franchise, franchising, buy a franchise, buying a franchise, choosing a franchise, best franchise
Gareth Williams is an advisor on franchising from the franchise buyers perspective. A past franchise owner he has real experience of franchising 'from the trenches'. He has written what many consider to be the definitive guide to buying a franchise. This is available from http://www.realworldfranchising.com
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