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This Makes CNBC Documentary Look Like a Love Story

January 17th, 2011

I have seen the future of negative franchisee validation and franchisors aren�t ready. I�m not ready. My jaw hit the floor. I forwarded a recent link to FPG Consultants of damning video created by a disgruntled, failed franchisee of a large home service franchisor and posted on YouTube. I received back a steady stream of one word responses like, �Wow!� �Geez!� and �OMG!�

The two-minute video computer animation shows a running dialogue between two characters, one representing the franchisee and the other the franchisor. The story starts with the franchisor promising the franchisee a better life and includes other franchise sales techniques used by the franchisor during the franchise sales process. The video continues with the now operating and struggling franchisee telling the franchisor, �I am following the system and the system isn�t working� and begging the franchisor for more ideas and assistance. The franchisor responds with �you need to spend more money� and �you are not following the system.� When the franchisee eventually goes out of business, the franchisor character forces the franchisee to sign to what amounts to a �gag order� in consideration to get out of future financial obligations and pasts debts. Lastly, the video directs viewers to the franchisees� website www.(the franchisor�s name)sucks.com.

Once there, visitors can read threatening emails and mail correspondence between the franchisee and franchisor. In addition, the franchisee posted the actual confidentiality agreement the franchisor requires failed franchisees to sign where franchisees promise to never make another negative comment to any franchise candidate about anyone within the organization or the opportunity itself in exchange for forgiveness of debt.

If you are a franchise candidate looking to invest your entire life savings, and you know these agreements between the franchisees and the franchisor exist, why would you trust any positive feedback any franchisee gives you?

If that isn�t damaging enough, this disgruntled franchisee posts past franchisee testimonials the franchisor used in print advertising to promote their franchise opportunity. Next to the testimonial, the franchisee posted the date that the franchisee poster child went out of business. This sends the message to all franchise candidates, �Even if you hear positive feedback today, don�t assume these franchisees are going to be around tomorrow.�

Franchisors have labored under the false notion that if their franchise agreements are strong enough, they will protect their investment and maintain control over their own destiny. While the scales of justice often tip in the franchisor�s favor, the scales of public opinion will usually tip towards the franchisees. The internet and social media are great leveling forces. One single failed franchisee with nothing more to lose and a lot more to say has a world-wide audience and at any moment can put a heavy thumb on the scale. Ultimately, these forces will work together to entice franchisors and franchisees to work together and problem solve rather than damage the brand they both represent. But they may need to learn a hard lesson first. The greatest protection a franchisor has lies within how consistently the franchisees produce strong financial returns, how readily franchisors own their role in the results franchisees produce, and how well they listen to each other’s concerns and engage in win-win solutions.

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