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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& #39;s business was doing well for a few years and got noticed by some folks in franchisor& #39;s HQ. https://twitter.com/sabrinacassiope/status/1265959614794723328">https://twitter.com/sabrinaca...
Handled a franchising case once (not Tealive btw).
The franchisee& #39;s business was doing well for a few years and got noticed by some folks in franchisor& #39;s HQ. https://twitter.com/sabrinacassiope/status/1265959614794723328">https://twitter.com/sabrinaca...
The machine in the franchisee& #39;s outlet requires periodic maintenance and repairs due to daily heavy use.
What the folks in franchisor& #39;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& #39;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& #39;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& #39;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& #39;t cheap.
Their justification for this was because the franchisor& #39;s HQ allegedly received a lot of complaints about the franchisee& #39;s service from customers.
Guess what the complaints are all about?
It& #39;s about frequent faulty machines causing several products to always be unavailable.
Guess what the complaints are all about?
It& #39;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& #39;s HQ.
Note that under the franchise agreement, franchisee is obligated to purchase supplies from the franchisor and hire the franchisor& #39;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& #39;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& #39;s HQ did just that right when they start delaying the repair services.
The franchisor& #39;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& #39;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& #39;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.
