February 3rd, 2014 it was announced that Alix Box, a former marketing person for Starbucks (and Holt Renfrew) was brought on to Second Cup as CEO. If you are in the coffee business in Canada, this announcement would force you to take notice, but if you are in the coffee *franchise* business business, this announcement should have you somewhat concerned.
In Vancouver, Second Cup used to enjoy a fairly strong presence around town – at least to the extent that when you said the name most people knew what it was and where you could find one. Over the years, they were slowly ground out of the business as more aggressive local franchise chains overshadowed them and the demand for higher quality drove customers to more boutique options. Many can still remember when Second Cup was ‘the place to meet’ in Richmond Centre until a few years ago when even that location evaporated into thin air. Now there are just three locations in Vancouver – two of which I had no idea about.
But that may soon change.
If there is ever a place in the world a chain can test their coffee skills, Vancouver is it. Perhaps Second Cup will put the gloves back on in Vancouver in an attempt to redeem the territory on which other Vancouver coffee franchises have taken from them. If Second Cup can provide a win-win business model for their Franchisees (while avoiding the Supreme Court), provide a very high quality offering for their customers, launch branding that distinguishes them and replaces their fairly generic flavour, and re-launch with a bang – they have a fighting chance. Vancouverites, if they like your brand, will give their loyalty.
Anyone considering the purchase of any Franchise location or system needs to be fully aware of the best thing that happened to a Franchise buyer. Conversely it is probably the worst thing that has ever happened to bad Franchisors…
Franchise Grade is amazing and it’s no joke. Jeff Lefner and his team blends quality raw data from actual Franchisees with technology to spit out a report card that should make any Franchise organization stand up and take notice if not quake in their boots with fear. If I were the Franchisor, I’d want to make sure I was getting a good grade before this hits critical mass. On the flip side, well run Franchises who earnestly care about the profitability and general well-being of their Franchisees stand to sell many locations through this website – and they don’t even have to pay for the marketing! Those Franchisors who have been using fear tactics, writing scummy deals with tricky contracts and who like skimming all the profits for themselves are in for a very rude awakening as Franchise Grade gains awareness.
These reports are not cheap by any means, but most Franchisees would agree that, if they had the chance, they would have cut a cheque for $10,000 to have learned these details before they purchased.
From our understanding of the system, current Franchisees are given about 90 questions to answer anonymously key and revealing questions about their Franchisor. The results of that data is then handed off to an actual team of professional statisticians who verify everything and make sure its as solid as possible. From there, when the reports are ordered, the data is pumped into a nice report and handed off to the prospective buyer at which point the Franchisor will either weep or rejoice.
We will continue to review FranchiseGrade.com but for now, we give them an A+ and strongly recommend every potential Franchise buyer purchase these reports whenever available. If the reports are *not* available we strongly recommend you ask the Franchisor to make sure their Franchisees have submitted their anonymous report before you buy. This one report could save you literally hundreds of thousands and in some cases – millions.
Well respected and well read local business publication Business in Vancouver not only picked up on the court filing made by three former Blenz Franchisees against its former Franchisor, but ranked it as their ‘Lawsuit of the Week’ – and rightfully so. Blenz has enjoyed for many years a natural windfall of sales produced by loyal customers who feel warm and fuzzy about the ‘local Canadian brand’. No doubt the very presence of this filing surprised the author.
Although the BIV article covers fairly well the claims of hindered store sales and lease renewal problems common to the three plaintiffs, a $6.00 download of the very large filing reveals that it didn’t even touch upon one of the most devastating claims against the Franchisor – Kormi’s doomed, mandatory, and very expensive renovation and surrounding events. This part of the claim alone covers pages and pages and, if these claims are proven in a court of law and picked up by local media (ie. Steele on your Side), they will certainly have the potential to evaporate a good percentage of the ‘warm & fuzzy’ mentioned above.
It is also noteworthy that there was no mention of the first court filing of 2014 against Blenz by Elizabeth Jacobo. Reports from those who have read this filing indicate that it is on par or even more potentially devastating to the Vancouver brand than the claims found within the Taylor, Sahdra, Kormi suit.
And what a great question that is. There are lots of stakeholders in a franchise system, including, but not limited to:
the customers (better spend your gift card money asap!)
the landlord (who are you going to go after for late rent?)
One would hope that they have already formed an association that could immediately meet and start taking measures to protect their investments. One would hope that the Franchisees are not relying on their head office to provide accurate, timely, or beneficial information at this point. One would hope that they have their legal team lined up and ready to start work.
It will be most interesting to follow the results this event will have on the Franchisees and we hope that some of them will be able to write to us with their insight.
As always, send your comments and stories to email@example.com. We are here to help.
Over the last couple of months, we have been involved in painful conversations with several coffee shop Franchisees which was not unlike the dialogue a parent might have with their children about the dangers of drinking and driving or getting involved with gangs. The older, wiser parent explains – from their own experience – the death and pain surrounding these important life decisions and why it’s important to avoid bad decisions at all costs.
In the first dialogue, the Franchisee had already been abused by their Franchisor when asked to cough up a large amount of money that was clearly for the unilateral gain of the Franchisee and the unilateral pain of the Franchisee. Yet the Franchisee paid. The Franchise also told us that the business was for sale and has been for a long time. We explained that the commercial agent the Franchisee was using was highly questionable and may have other motives than the sale of the shop. Yet, the Franchisee continued to use this agent. This person even went so far as to explain that there was no happiness surrounding the business and it is not making much if any money. Yet this person remains the Franchisee on record for that location today.
In the second dialogue, a Franchisee who has watched several other owners in the same chain get raked over the coals by exorbitantly priced – and forced -renovations (which lead to their eventual demise) reached out to us for our advice. Can you guess what our advice was? You guessed it. We said, “Run for the hills and do not look back.” Yet, it is rumoured that this Franchisee is about to hand over the money!
These two dialogues have resulted not only in the hurt of the Franchisee while they operate but also in the hurt of the people who advised them – much like the parents who watch their children drink and drive against their advice. One can understand the teenager making life decisions like this but it does not explain very well the adults because they are… well… adults.
One former business owner presented the idea that these people are suffering from Stockholm Syndrome. Don’t worry, I didn’t know what it was either so here is a pretty good video link that will bring you up to speed. I believe this person has hit the nail right on the head.
Franchisors (and the courts of law know this) are in a position of power over the Franchisees. There are no two ways about it and even before signing the Franchise Agreements, everyone knows it. If the Franchisor turns out to be highly ethical and wants a win-win business relationship you have done well and have obviously been an avid reader of VCSFA articles. However, if the opposite happens, you are now a captive for the duration of your lease term unless the franchise allows you to take back your retail space and go independent.
We have witnessed, first hand, Franchisees begin to defend their Franchisors even though they had previously acknowledged them as abusive dictators. Their mental condition began to change as the pressure was put on them by the Franchisor. They began to think about their seemingly powerless situation and feel hopeless against their new Goliath. They began to have thoughts that perhaps if they tried to work with the Franchisor amicably that their hostile environment would somehow turn out less hostile and they would have a better chance of coming out unscathed – both legally and financially.
From the non-business owner and former Franchisee’s perspective, this kind of behaviour is akin to the nice girl who insists on staying in the abusive relationship. No matter what counsellor or agency you refer her to, she insists that she will be able to change this abusive man and that somehow things will get better and one day she won’t wake up with black and blue eyes. In both situations, what they haven’t considered is that a man cannot change another man’s heart. Whether it’s a corporation or an individual, a change must occur in the heart for outward change to manifest.
So how do you know which chain is oppressive and captor-like? You will know them by their fruit. No good seed from a good tree will produce bad fruit and conversely no bad seed from a bad tree can produce good fruit. In a franchise environment, the individual Franchisees and their locations are the fruit.
No good seed from a good tree will produce bad fruit and conversely no bad seed from a bad tree can produce good fruit. In a franchise environment, the individual Franchisees and their locations are the fruit.
Need some advice? Considering signing up with a franchise? We are here to help. Shoot us an email at firstname.lastname@example.org
We were informed today that at least two lawsuits have been filed in the Supreme Court against Blenz the Canadian Coffee Company LTD so far in 2014 – and it’s only March!
CLICK TO SEE DETAILS
Following our usual protocol here at the VCSFA of verifying information before sharing, we searched and confirmed the report . A quick trip to the Court Services Online (an online service for seeing what’s going on in the courts) revealed two separate filings for 2014 already.
An individual, Jacobo (#140041), and a group of three, Taylor, Kormi, and Sahdra (#141773) are listed as Plaintiffs and Blenz Coffee as Defendants.
Also listed as a Defendant in the group case is “Moadebi“. A quick internet search reveals this individual as a commercial agent.
We have not yet obtained the court documents associated with these listings (available for a $6.00 fee for download).
As always, please continue to share information like this with us so that we can remain the source for coffee shop franchise information in Vancouver.