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Franchising is not a good idea for a new entrepreneur unfamiliar with "corporate manoeuvre".
Handled a franchising case once (not Tealive btw).
The franchisee's business was doing well for a few years and got noticed by some folks in franchisor's HQ. https://twitter.com/sabrinacassiope/status/1265959614794723328
Handled a franchising case once (not Tealive btw).
The franchisee's business was doing well for a few years and got noticed by some folks in franchisor's HQ. https://twitter.com/sabrinacassiope/status/1265959614794723328
The machine in the franchisee's outlet requires periodic maintenance and repairs due to daily heavy use.
What the folks in franchisor's HQ did was that they intentionally delayed repair service consistently for almost a year until the franchise agreement was about to expire.
What the folks in franchisor's HQ did was that they intentionally delayed repair service consistently for almost a year until the franchise agreement was about to expire.
Under the law, a minimum period of a franchise agreement is 5 years.
The law also provides that if the franchise agreement expired & renewed by the parties, the terms & conditions in the new agreement must be better for the franchisee or at least similar like the old one.
The law also provides that if the franchise agreement expired & renewed by the parties, the terms & conditions in the new agreement must be better for the franchisee or at least similar like the old one.
What the folks in franchisor's HQ did:-
They offered to renew the agreement but for only one year, increasing royalty fees etc. They also imposed a requirement on the franchisee to purchase new machinery in order for the agreement to be renewed. Those machinery aren't cheap.
They offered to renew the agreement but for only one year, increasing royalty fees etc. They also imposed a requirement on the franchisee to purchase new machinery in order for the agreement to be renewed. Those machinery aren't cheap.
Their justification for this was because the franchisor's HQ allegedly received a lot of complaints about the franchisee's service from customers.
Guess what the complaints are all about?
It's about frequent faulty machines causing several products to always be unavailable.
Guess what the complaints are all about?
It's about frequent faulty machines causing several products to always be unavailable.
Of course, the franchisee felt cheated and claimed that this issue is due to franchisor's HQ.
Note that under the franchise agreement, franchisee is obligated to purchase supplies from the franchisor and hire the franchisor's contractors to do maintenance and repair works.
Note that under the franchise agreement, franchisee is obligated to purchase supplies from the franchisor and hire the franchisor's contractors to do maintenance and repair works.
The franchise agreement also provide that the franchisor cannot open or allowed to be opened another outlet within 5 km radius.
The franchisor's HQ did just that right when they start delaying the repair services.
The franchisor's HQ did just that right when they start delaying the repair services.
So the franchisee decides not to renew the franchise agreement and open a brand of their own. at the same time, the tenancy agreement with the mall is also about to expire.
when approached to renew the tenancy, the mall's management refused to renew the tenancy because they prefer reputable brand as a tenant instead of new brand & they just happen to have one looking for space at the time.
so they have no choice to cut their losses & halted the business.
4 months later, when they visited the mall, imagine the surprise when their old outlet is still running but is now owned by others.
4 months later, when they visited the mall, imagine the surprise when their old outlet is still running but is now owned by others.
So this concludes the franchisor's HQ conspiracy to take over a profitable outlet.
The client did initiate a legal action but had to withdraw halfway because of the huge litigation cost.
Going against corporate giant is not cheap.
The client did initiate a legal action but had to withdraw halfway because of the huge litigation cost.
Going against corporate giant is not cheap.
