Wrong location, concept, shaky, point-of-sale oversized… whatever the cause of their misfortunes, the franchisees concerned are all living an obstacle course.
A location in a street semi pedestrian, two not transport and a quartier bobo de Lyon, a national brand premium ! When Patricia* opened in December 2012, her hair salon under the banner of a network famous, she is obviously very confident. “I had met the tender specifications for the renovation of the lounge, followed by the initial training and hired two people, as recommended by the franchisor. Anyway, I had to put all chances on my side,” she recalls.
people pass by, look at the prices, but they do not. Patricia alert the franchisor. The facilitator moves around to see that everything is in order. But no concrete proposal to boost the case. Quickly, she dismissed his two employees, weakens, but sticks with it. By lowering the price, the room fills up a bit. But it’s not enough. The franchisor puts pressure on them, citing the fact that it creates harm to other franchisees of the network. Regardless, the head company is approaching local merchants, because of the pub… in vain. Finally, the district, very popular, does not correspond to the target of the sign.
At the end of six months, even with a charge divided by two, Patricia no longer has the means to pay. The franchisor does not grant any further effort. In the beginning of 2014, eighteen months after its launch, it files for bankruptcy, sells his car and his house to continue to live, to repay a portion of its debt and pay for the education of his daughter… a nightmare. A far from isolated. Because undertake in a franchise is not an all-risk insurance. Even if the networks don’t like to expand on the subject, the failures of franchisees are not as rare as they suggest. The reasons are various. The fact of the franchisor. But also the franchisee.
We do not sell the same thing in Paris or at Melun
because, often, the choice of the location and/or city location. “Even with the best concept of the world, if the place is not good, the case will not work. We do not sell necessarily the same thing in Paris or Melun, in the North or in the South. Or in the different neighbourhoods of the same city,” insists Charlotte Bellet, a lawyer with the firm BMGB. In addition to the location, the choice of the sector is decisive. Some activities are more fragile than others, or are already saturated.
There are also concepts that are not profitable enough to justify development in the franchise. And yet franchisors are starting, and multiply the openings. “The new sales represent a windfall. In addition to the entry fee, they collect the margins back on the materials and equipment to the layout and equipment of the point-of-sale, the fees for training and communication. For them, regardless of whether the franchisees fail the first or the fifth year. They have pocketed the money due to the installation and they can continue to develop,” said the defender of the franchisees. For the lawyer, a folder of franchisee on two difficulties is a problem of surface settlement. Oversizing often mandated or strongly recommended by the head of network, but which rhymes with the charges and pay disproportionate.
A local sometimes oversized
John*, a former employee of a network of kitchen experts, installed with his brother as a franchisee in the Vosges, in the bill. In August 2012, they will open their showroom with up to five people to the sale. “It was a standard part of the network : 400 square meters, 5 employees, 12 kitchens sold per month per vendor for a monthly turnover of 90 000 euros”, he remembers. So much for the theory, because on the field, the recipe does not work. Lack of flow in the store because of a catchment area too small, the two brothers generate trudging for 45 000 € turnover per month. But the charges (rents and wages), they remain.
As of 2013, their accountant, the alert on the financial abuses. They are coming to the franchisor to demonstrate to him the over-dimensioning of the local area and to share their difficulties in meeting expenses and purchase of kitchens. Deaf to their financial setbacks, the head of network cut the supplies of the kitchen and encourages them to sell their business for 100000 euros, against an initial investment of 400 000 euros. They refuse, liquidate their business in November 2013 and attacking in justice the franchisor on the veracity of the figures provided in the market study and the size of the local suggested. “It is a real tragedy financial. My house has been mortgaged, I still owe 52 000 euros to the bank and I have no more economy”, list, John, who has fortunately found a station employee.
“A development of the road, which reverses the direction of passage of a street, works, tramway last two years… These vagaries of construction may also lead to an economic disaster for the franchise,” insisted Charlotte Bellet. So it is best to check with the town hall, but also at the neighbors (merchants or not), to find work in the months to come. Go to the place several times in a row and make a field survey is necessary but not always enough.
implantation of ill-chosen
In July 2012, Peter* opens his bakery to the top of the range of 200 square meters located around a roundabout very from the suburbs of Clermont-Ferrand. The case promises to be juicy. As of September, however, the trouble begins. The roundabout is congested at peak hours, hours of the purchase of the bread. No question for the customers to make a detour by her bakery, and thus lose their place in the long line of cars. “The franchisor has given me the technical skill, but not the advice that is relevant to the area of implantation. Similarly, he has not communicated the state of the market prior to the signature, namely, the competition is, the composition of the population by socio-professional category… I also hid the amount of the average rent in the network, 3 500 euros per month compared to 5500 € from my side”, enrage-t-it.
in Spite of multiple alerts, the franchisor leaves a Stone sink and spend (advertising space 4×3, pub, radio, tasting of bread on the roundabout). Barely lost. Peter does not sell his bread, he loses 90% of its margin. In July 2014, he liquid his company and now finds itself with a record of over-indebtedness on the arm and a threat of seizure of his family home. Even if he won in the first instance against the franchisor, this ex-franchisee awaits the verdict of the appeal before shouting victory. He guesses that it will not get all his marbles, and that the damages he hopes, will not be sufficient to cover the prejudice to the moral and psychological that he has suffered.
All franchisors do not shine by their honesty. But all the failures do them not. Some franchisees do not have the profile, nor the sense of trade, nor the skills required of manager, and manager. “Some people also think that their presence in the store is optional. Error. At the beginning, and as long as you don’t have the means to pay for a manager or a director of point-of-sale, the franchisee must be on-site. It is in the image of his business and therefore its sustainability,” concludes Charlotte Bellet.
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* The names have been changed.