If you choose a career option such as buying your own franchise rather than taking a job in Corporate America you must realize that you will have to disclose certain financial information in order to qualify prior to the sales process or acceptance of application. Some believe this is not fair and worry about identity theft. So, should the government regulators allow franchisors to ask for this information? Some franchise buyers say no and yet how can the franchisor know if you have the money to purchase the franchise in the first place? Now then your financial information is necessary because 80% of all franchise applicants lie about their financial ability to buy a franchise and this costs franchisors money in wasted effort from sales staff. Meaning 80% of their time would be burned up if in fact they coddled all the liars out there. This means 80% of the cost is added to the ratio of franchise fees to sales. Generally if my memory holds true the average franchisor uses up some 50% in the sales process. If you add 80% more then you would have to raise the franchise fee by 120% just to break even and 240% to hold the same 50% ratio. Meaning a franchise fee of $20,000 would have to be some $46,000 and then less people could afford it and would all be charged more money and thus hurt the consumer? See how the logic hurts consumers? So what those who decry the surrender of such information they want more rules on franchisors to protect franchisees who do not tell the truth? Why not reduce the rules and deregulate and lower the costs for everyone, meaning your investment might be half and your business might have succeeded? Everything is ass-backwards in franchise law. Could I do better? Of course, I have lived all sides of the game, studied it from every angle, of course I could do better! But one has to ask why beat your head against the wall? I have been a franchisor, started my business with a single unit from scratch and been a Board of Director for the AAFD or American Association of Franchisees and Dealers. We need less rules and regulations on franchising. If franchise buyers do not wish to show their financial information to the franchisor then do not, you can always work in Corporate America or start your own business and learn the hard way from scratch. Consider all this in 2006. |
