Of coursework, the more expensive the franchise & the more invested then usually the more sophisticated the franchisee, & therefore it is less common. The lower the cost to get in to the franchise, the less there is to lose for a franchisee who walks away. Perhaps, you should not be surprised because nowadays people walk away from their homes when they owe over they are worth & they are getting behind in payments. Sometimes they hand the keys back to the bank & say; "Hasta La Vista!"
It may not sound irrational to you, but franchising companies do have a controversy with franchisees that abandon their location, skip out of town, & are nowhere to be seen. It happens even with some of the top-rated franchisors in the country. The franchisee gets in to trouble together with his vendors & cannot pay for the supplies coming in, is late on his rent, fails to pay withholding taxes, & skips out without paying his most recent payroll. You'd be surprised how common this is, & it happens more often in the coursework of hard economic times.
Prior to retirement, I ran a franchising company, & it was in the automotive service sector. Our franchises were mobile operations, & every one time in some time they did have a franchisee disappear. For us, it was a tiny more serious because they took with them our proprietary equipment, confidential operations manuals, & perhaps moved to a different city, changed the sign on the side of the vehicle, & continued their business.
In fact, a couple of times they tracked these folks down, & they made all sorts of excuses to justify their actions, perhaps in an try to get us to look the other way & forget about it. Of coursework, they were using our business model, & operating the business in competition with us. As our company grew bigger & bigger it was harder & harder for these individuals not to be discovered by of our new franchisees, or existing team members.
In this case they didn't exactly abandon the business they stopped paying for it. Often they would owe funds to the lending companies, & on their automobile loan, not to mention back royalties. I can recall cases where they had sold our proprietary equipment to competitors, & given away our confidential operations manuals. But it was equally as bad when they abandon the franchise, stopped servicing customers, & left burned territory, as they had to go in & deliver those services they had promised to the customer until they could receive a new franchisee in to buy that territory, or get an existing franchisee to expand & cover it as well as whatever other territory they'd already been granted.
In the event you are franchisor, & this has not happened to you yet, I guarantee you it will sometime in the future. The way you handle this is important to your brand name, & the remainder of the franchisees in your franchising process will be watching to see the way you deal with this issue. Indeed I hope you will think about all this & think on it.
It may not sound irrational to you, but franchising companies do have a controversy with franchisees that abandon their location, skip out of town, & are nowhere to be seen. It happens even with some of the top-rated franchisors in the country. The franchisee gets in to trouble together with his vendors & cannot pay for the supplies coming in, is late on his rent, fails to pay withholding taxes, & skips out without paying his most recent payroll. You'd be surprised how common this is, & it happens more often in the coursework of hard economic times.
Prior to retirement, I ran a franchising company, & it was in the automotive service sector. Our franchises were mobile operations, & every one time in some time they did have a franchisee disappear. For us, it was a tiny more serious because they took with them our proprietary equipment, confidential operations manuals, & perhaps moved to a different city, changed the sign on the side of the vehicle, & continued their business.
In fact, a couple of times they tracked these folks down, & they made all sorts of excuses to justify their actions, perhaps in an try to get us to look the other way & forget about it. Of coursework, they were using our business model, & operating the business in competition with us. As our company grew bigger & bigger it was harder & harder for these individuals not to be discovered by of our new franchisees, or existing team members.
In this case they didn't exactly abandon the business they stopped paying for it. Often they would owe funds to the lending companies, & on their automobile loan, not to mention back royalties. I can recall cases where they had sold our proprietary equipment to competitors, & given away our confidential operations manuals. But it was equally as bad when they abandon the franchise, stopped servicing customers, & left burned territory, as they had to go in & deliver those services they had promised to the customer until they could receive a new franchisee in to buy that territory, or get an existing franchisee to expand & cover it as well as whatever other territory they'd already been granted.
In the event you are franchisor, & this has not happened to you yet, I guarantee you it will sometime in the future. The way you handle this is important to your brand name, & the remainder of the franchisees in your franchising process will be watching to see the way you deal with this issue. Indeed I hope you will think about all this & think on it.
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