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.
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