| I ran a franchise company for many years, a car | | | | son would like. Also she would need to talk to the |
| wash franchise, and we use to get the most | | | | transferring franchisee as to price and other |
| ridiculous franchise buyers who thought they wanted | | | | consideration. I should not send a UFOC until I know |
| a franchise. It seems we had to deal with these | | | | the franchisee is interested in selling, because |
| Kookoo birds because they have consumer rights | | | | otherwise I am offering to sell a franchise in an |
| and the Federal Trade Commission, which looks over | | | | exclusive territory, which has already been sold. In |
| franchising goes out of their way to let these | | | | this type of situation this proposed rule really has a |
| consumers get away with these tall tales. | | | | problem. |
| We had a potential franchise buyer wish to buy a | | | | Recently I had a potential buyer fill out our |
| franchise in Peachtree, GA. He filled out our form and | | | | questionnaire and where it asks "How will you pay |
| said he would seek a small business loan and we | | | | for this franchise they listed "Family members and |
| discussed what it would take to put in a fixed site | | | | personal savings." When talking with them on the |
| carwash. He would not reveal how much money he | | | | phone he confessed to me that his brother was rich |
| had available. He said he had excellent credit and had | | | | and that he could secure all the money necessary to |
| just purchased a new house. We instructed him to | | | | buy two areas (franchises) and multiple units. Great, |
| look into a business loan and if he could come up | | | | then we are interested since the person appeared on |
| with the required capitalization we would proceed. | | | | the application to be a great person, which in our |
| Turns out the guy asked for a 1.6 million dollar loan | | | | franchise is a criteria. This unfortunately is getting |
| and found out he needed 20% down, called us back | | | | harder and harder to find the average person you |
| and said he just did not have that level of funding. He | | | | meet. I asked the potential buyer if his brother was |
| of course needed $320,000. As it turns out after | | | | going to have an ownership of the company. He said |
| several hours of discussion that he did not even | | | | no, it would just be a loan. We then proceeded, |
| qualify to buy our mobile franchise unit and could not | | | | disclosed the individual only to find out his brother |
| come up with $6,000 in real money. He worked for | | | | was not liquid and could possibly only lend $15,000 by |
| Motorola at the time. He probably has been laid off | | | | using credit card checks as cash and wanted a 40% |
| with the last wave of 20,000 people. The big | | | | share of the company. Okay we can do a smaller |
| problem here is how he dodged the question and | | | | single unit franchise we thought, since the rest he |
| never revealed he had no money, which would mean | | | | could get in a loan through our vendor from GMAC or |
| he did not qualify. He knew exactly what it would | | | | GE Capital for the equipment. Of course the brother |
| cost before he filled out any forms or even | | | | would now need to qualify too, and together they |
| contacted us. He lied or assumed he could easily get | | | | would be able to make the deal and start their new |
| financing for a small business. He assumed also since | | | | business. The brother would not sign the application |
| he was black, which he later revealed that the SBA | | | | form and we could not verify his information, so we |
| could give him a grant. Now that would be cool, I | | | | withdrew the offer, but the potential buyer said you |
| wonder how many franchises we could put in if that | | | | cannot withdraw the offer you said; "I can buy your |
| were the case? Of course he did not alert us to the | | | | franchise and you sent me the offer to sell me a |
| fact that he was going to try to go out and get the | | | | franchise and the agreement and I sent you back a |
| money for free. If that were the case we would also | | | | receipt of receiving this offer and I am going to buy |
| not have been interested because he could simply | | | | this franchise," His rational was that we had offered |
| walk away from the franchise later at any time | | | | to sell him a franchise and on his application he said |
| without losing any money and we would have burned | | | | he could get money from family members and he still |
| territory and lost brand name reputation in the high | | | | had five more siblings and he would not give up until |
| end neighborhood of Peach Tree, GA. If we disclosed | | | | he got the money. |
| this individual after the few phone calls we had with | | | | I wonder how many UFOCs I will send out to all |
| him, he would have received in fact an offer to buy | | | | these siblings, if your rule is adopted, who decide to |
| our franchise from us. Yet once the facts were | | | | call up or ask a question about the business, knowing |
| known we would never offer him a franchise. He | | | | they will not buy into the franchise but act just to |
| couldn't have bought a franchise anyway. With less | | | | appease their brother. And it occurred to me when |
| than $6,000.00 in cash he is not even in the ballpark. | | | | discussing this issue with some team members, well |
| We recently had a nice lady out of Brentwood, TN fill | | | | he may have a hundred relatives and almost |
| out our online form of interest in our franchise. When | | | | everyone has parents and some of us still have |
| I called her back to discuss this, she said "What is the | | | | grandparents hanging around watching us on the |
| name of your company again, I went to so many | | | | sidelines as we go through life. This buyer is really |
| web sites?" Well, this is interesting. She went to how | | | | serious and determined and he said he would never |
| many web sites and filled out how many forms | | | | give up, but if I have to send a UFOC to every single |
| generating time and work for every franchisor she | | | | friend or relative who promises to look into it, I as a |
| went to. I almost hung up since she was obviously a | | | | franchisor am not interested in selling him a franchise. |
| looky lou, but I did not wish to be rude. After talking | | | | Meanwhile how many times will I revise my franchise |
| for a while it became very apparent that this | | | | the UFOC until he finally finds the money under a |
| individual was in the Image Consulting Business and | | | | rock in the back yard? He said "God will help me find |
| wanted to sell us some type of services. After | | | | a way." Oh Great! And maybe he will, but who is |
| listening to her for quite a while about all her great | | | | going to pay me for the 50+ UFOCs I have to send |
| credentials about her Image Business, I realized this | | | | out every time he finds someone with a pulse who is |
| lady was not interested in a franchise at all. She of | | | | willing to send me an email? |
| course had a cover story for her inquiry. It went like | | | | And as the business relationship studies and articles |
| this; "My son is working for someone else and my | | | | show in HBR (Harvard Business Review), Fast |
| husband is a Podiatrist and I have PhD in Image | | | | Company, Fortune Small Business, Darwin, |
| Psychology, and we want to set up our son in his | | | | Entrepreneur, Business 2.0, E-Business, Small Business |
| own business. He does not have a college degree. I | | | | Computing, MIT's Technology Review, Red Herring |
| do not think this type of business is the type I would | | | | and CIO it is important for proper CRM (Customer |
| want him to do." The story seemed questionable | | | | Response Management) to reply to emails with in 24 |
| since I was talking to her instead of her son. She did | | | | hours. With this proposed rule simple business |
| not know what her son would want in a franchise | | | | etiquette and norms would require disclosure to |
| and wanted to continue to rule his life. Obviously a | | | | anyone who asked a question that we answered by |
| story to get me or someone who works for me to | | | | any form; email, fax or direct mail? Whether or not |
| listen to her sales pitch. She had clearly | | | | we were simply trying to nicely answer a question or |
| misrepresented herself in her telemarketing sales ploy. | | | | thought there was potential with that individual. |
| Does this person deserve a UFOC of 155 pages and | | | | Forcing franchisor's to be careful in discussions, |
| the $3.50 to express mail it? | | | | tentative in information discussed and hostile to |
| On to finish this story; We already have a franchisee | | | | simple questions asked by consumers if pressed. And |
| in Brentwood TN, who last year indicated he may be | | | | the consumers will press, because they want |
| willing to sell part of his franchise. I told the lady she | | | | answers to their questions, they are impatient and |
| should call the franchisee and deal directly with him in | | | | demand a direct answer and not the run around. If a |
| a transfer, but that she would have to have herself, | | | | franchisor answers, he has to send this phone caller, |
| if she would be a 5% or more owner, and her son fill | | | | e-mailer an entire UFOC? Hmmm? Are we sure we |
| out our application form before we could allow a | | | | should stay in the franchising industry and give all of |
| transfer. I gave her the name of the franchisee in | | | | our information to anyone while working hard to stay |
| Brentwood TN, the phone numbers and indicated | | | | within all the current regulations and still provide the |
| that she and her son should contact him and ask to | | | | American Dream to everyone else? |
| ride on the truck for a day to see if it was what her | | | | |