Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

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.

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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.

Read our March 14th report of the growing number of lawsuits Blenz is facing in 2014.

Check back regularly for updates on this and other similar stories.

 

 

What do Burger’s and Coffee Have in Common?

The answer to the title of this article is, “They are poster-boys for the franchise business for better or for worse.”

A CBC story about Marufa Ahmed and her husband Mohammed Hashen, caught the eye of a VCSFA reader who forwarded the article to us. Marufa and Mohammed purchased a Lick’s burger franchise (they operate in Ontario), gave up 18 months of their lives, day in and day out, only to have the store taken from them.  Here in Vancouver, the VCSFA has received reports of ex-coffee Franchisees who spent well over half a million dollars (CND$) on their investment and over 60 months of their lives only to lose it in an even worse way than this couple.

What the reader needs to understand is that Franchising is not your ‘own’ business.  In fact, if one were to take a few steps back he or she would realize it is perhaps the furthest thing possible from having ‘your own business’, other than the fact it requires a capital investment and the financial business model is similar.  The time when the Franchisee sooner or later comes to realize this, is when they encounter the triangular relationship between the Landlord, the Franchisor, and the Franchisee.

The ‘relationship’ is held together by hand-crafted and very clever legal documents.  In some reputable franchises, the Franchisor actually works side-by-side with the Franchisee to establish the best possible rent rates.  They are transparent and they work diligently to make sure their front line soldiers (the Franchisees) are comfortable with the decisions. Conversely, in other franchises,  the Franchisor will sign lease documents with the Landlord with ‘unknown motives’ and will keep the Franchisee completely in the dark throughout the experience.

We have a current member who asked his Franchisor for lease details over 36 months ago (he was trying to sell) and the Franchisor refused to provide the information he needed claiming ‘we don’t know what the future holds’.  Then, when the very last legal deadline to begin lease negotiations with the Landlord was upon them, they slowly started the process, but still keeping the Franchisee completely in the dark throughout.  The Franchisee today still has no idea what will happen to his store in the fall because nothing has been provided him on paper and there are less than three months remaining in his lease term.  This is definitely not ‘owning your own business’.

We have just become aware of another location where the Franchisor may have paid above market rents in comparison to other similar businesses in the area, and the Franchisee will now be paying for that decision each month.

Before purchasing a Franchise, it is extremely important that you investigate – in great depth – this relationship between the Franchisor, Franchisee and Landlord.  If something seems fishy, or there is any lack of transparency, run and do not look back.  On the contrary, if you find that all the books are open and all the relationships where you stand to lose or gain are open, then you may have found a good Franchisor.

As always, do not hesitate to contact the VCSFA if you have any questions.  We are always happy to help.

Why opening your coffee shop franchise in Ontario and other places may be a better choice

If you didn’t read another post about the Arthur Wishart Act do so.

Here is a neat legal article that will help you understand why it’s so important that each province has such an act.  A disclosure statement is just one of many things that will help keep Franchisors accountable for their actions, before they begin their relationship with the Franchisee.

If they can’t get the disclosure right at the beginning, what do you think that says about how your future will go? At the very least it will show the professionalism of the Franchisor.

Please help VCSFA work towards bringing this kind of regulatory act to British Columbia and every other province while we’re at it.