Industry Top Secret: steps the franchise industry doesn’t want you to know about an agreement for franchise.
How the franchise scams will churn you Franchise scams rely on you seeing what appears to be a successful franchise outlet. You drive around and see franchised business, but what you don’t know it the franchisee is suffering financially, and when (not if, but when) the franchisee fails, the franchisor churns the unit, and makes more money off failed franchisees. Read Robert Purvin’s book, “The Franchise Fraud”.
How the serial killers of entrepreneurs work in the franchise system.
When you turn in your franchise termination, the franchisor will hit you with a secret two-stage franchise termination process that you had no idea would ever be pulled on you. Here is how the franchise scam happens to you:
Franchise agreement termination Steps
1st email
This Franchise agreement termination email is sent to you if you are over $10,000 behind in royalty payments. You are behind because you have been working their “franchise scam system” on a full-time basis, per their franchise agreement template. Their “franchise scam Systems” isn’t producing the revenue you projected, and you are trying to keep food on your table, hoping something improves. The $10,000 behind number is important because the Franchisor has to pay a franchise lawyer to send you a letter, and the $10,000 royalty threshold is enough make it worth their expense. Also, as a part of the franchise termination ‘system’, by now, they know you are financially exhausted, won’t be able to sue them (even though you can prove what they did is illegal), and they can begin the process of shutting you up with a “Gag order”, also known as a franchise termination “Confidentiality Agreement”.
Your email response to the 1st email from franchisor
You will respond with a solution to the threat of a franchise termination. You trust your franchisor, and think they will work with you. After all, you invested your life savings with them, right? You believed all the myths that franchising is a lower risk way to “own your own business”. You believed the government statements & support of franchising (but don’t know those reports are based on faulty surveys). A franchise termination solution might be sending the franchisor more borrowed money in the form of a check, from your home equity loan, a self-directed 401K, or a relative. The money doesn’t come from revenue generated from the “Franchise scam business” because the franchise scam is not making enough money after several years to pay for itself, let alone your personal income expectations. If you are financially exhausted from the franchise scam, you might offer a payment plan, or a promise to pay up based upon future royalties on deals you have in your pipeline.
2nd email (response from franchisor)
If you don’t send in the money, it’s as if your franchisor didn’t read your response to their threat of franchise termination. They just demand your franchise royalties, and threaten to terminate your franchise license agreement on a specific date. You are stunned that the Franchisor that you invested your life savings with is now squeezing you for everything you have, including your relatives money, just to keep your business afloat.
Your response to 2nd email from franchisor
You have to find a way to pay up the past royalties, or your franchise termination is imminent. If you pay your fees, you are stunned by how the franchisor is now back to being your best friend. You continue to struggle to keep the franchise license agreement afloat- the contract says you must work the franchise scam system full time! If you decide you have had enough of the franchise scam system, because the franchise scam just isn’t working, in your territory, for you, or for whatever reason, you notify the franchisor you want out, so you can stop the bleeding of the monthly franchise license agreement royalties. You read the franchise license agreement several years ago before you signed it, and you might have read it a few days ago. It appears to you, in the franchise license agreement, that if your royalties are paid up, you can terminate franchise agreement, and not owe any future royalties. That is not the case with Franchise Fraud. You are about to learn with franchise scams, the Franchisor owns you. Forever.
You are stunned by the next step, an overnight package arrives from the franchise lawyer.
In it is a series of documents, including a TRA, also known to franchise termination lawyers as a “Termination and Release Agreement”, but to you it feels like an Extortion letter, and Gag Order.
The first part of this franchise termination package will be an extortion letter. The extortion letter will threaten you with a frivolous lawsuit.
The second part of this franchise termination package will be what you have to do in order for your franchisor to not go after you with the frivolous lawsuit. This is the instant you realize your Franchise business was Franchise Fraud all along, and that your Franchisor is destroying your entrepreneur dreams. You thought the franchise scheme you bought was to sell their product, but you realize their real franchise system all along was to get as much money out of you before they silence you, and churn your license to the next victim, and gag you in the process.
The FBI website calls this Franchise Fraud, but when you call the FBI, they will ask if you signed a franchise license agreement, and when you say yes, the FBI will not help you. At this point of your franchise scam journey, you will likely be financially ruined, imminently facing bankruptcy, (even a divorce), and cannot afford to fight a long and frivolous lawsuit, pay the fees of the arbitration (arbitration is likely stated in your franchise license agreement), arbitration most likely in another state (of the franchisor’s choosing to their advantage).
After you check with franchise lawyers, call the Federal Bureau of Investigation (FBI) http://www.fbi.gov/ , FTC (Federal Trade Commission) http://www.ftc.gov/ , Small Business Administration (SBA) http://www.sba.gov/ , Department of Commerce (DOC) http://www.commerce.gov/ , and call other franchisees, you will see there is little you can do.
Your franchisor has the money to pay the franchise lawyers for the frivolous lawsuit. The franchise termination lawyers might even be on retainer with your franchise churning business.
The state of California has a new certification for these franchise lawyers, called a “Certified Legal Specialist, Franchise & Distribution Law”. Do you think you can fight this franchise scam on their home turf, while you are on the verge of filing for bankruptcy?
After you sign the franchise termination package, the franchisor has an internal franchise termination system set up where you are removed from their website, and your franchise license is listed as transferred, (not failed). This Franchise Misrepresentation gets a pass from the FTC Federal Trade Commission, even though your franchise license has a huge failure rate.
No comments:
Post a Comment