I cannot stress enough how important it is to investigate the franchise development company you are thinking of using when franchising. It is very disturbing to uncover that some of The Franchise Maker’s competitors are facing serious litigation, tax fraud and are under investigation for deceptive practices.
Yes this is all so true. Some of our unnamed competitors have been under investigation and currently in litigation for making misrepresentations when selling franchises for their clients. Evidently, several franchisees have come forward alleging that this franchise development company misrepresented their client because they had a vested interest in the client’s company making negligent misrepresentations, concealment of information, conspiracy and breach of contract. The prosecuting attorney has said “This company completely stepped out of the role of being franchise consultants and became their client’s partner, joint venturer and legal counsel”.
This supports my position that a franchise development company that also sells franchises for its clients is a conflict of interest. If you come across a company that offers this service and if they also require that you give them a percentage of the company to defer fees, RUN. Not only are you jeopardizing the integrity of your business, but also future franchisees who buy into your system.
Other published reports confirm that our unnamed competitors have had their attorneys walk out on them refusing to be associated with the franchise development company. It has also been reported that just last week some of these franchise development companies have laid off key personnel after failing to meet payroll. It is unclear how extensive these layoffs will be.
Bottom line, if you are shopping our competitors, do your due diligence so you do not inherit unnecessary headaches and legal challenges.
