buying a franchise! Look for churning and franchise the use of third parties, they Sisa "straws" that suck up good deals for you!
Unfortunately, the legal definition of "churning" in franchising chat and information sites like Blue Mau Mau, and even in places by the State regulatory agencies, eliminating the description of this insidious third party to churning out some franchisors, with low performance franchise concept, employed as a management strategy to maintain and grow the gross sales of the franchise system and perpetuate their existence in the market.
franchisors can increase their gross sales on the back of the system is not able to "establish" a franchise that lost the entire investment in a startup company - and who are not informed pre-sale failure rate than other "establishment" franchises franchise system before borrow money and put their life savings at risk in a very risky (not published) long-term commitment to the franchise business.
exploitive franchisors can perpetuate their systems and their earnings until they are able to sell new franchises from the front door of the system and boost sales of FIRE is launching unit from the back door to third party agents (straw), which are then to buy these units for pennies the original investment of a franchise. It is insidious, but apparently legal, the practice of churning out a third party, with both third party and franchisees work closely to acquire the failing unit, its tangible and intangible assets as cheaply as possible to a third party, succeeding franchise, which will continue to employ tangible and intangible assets in the service franchisor himself / herself. Although third parties are not churning may be illegal, it is my opinion that the failure to disclose third party churning out new customers and franchisees should be illegal and treated as fraud.
churning is defined on this web site listed above only as an act of franchisors, alone, the absence of the acquisition unit and re-selling the same territory again and again ... Some states, like Illinois, have moved to franchisors disclose this type of direct churning out new franchisees to discover this place and direct franchise churning in franchise Disclosure Document (FDD), however, there is no official description of a third party churning. Obviously, if directly churning considered material information that should be disclosed in the FDD, third-party churning should also be published in advance the new customer franchises.
third party churning, as supported by the franchisor, is not distinctive and noticeable in the Franchise Disclosure Document (FDD)-because, since franchisees are not informed and sophisticated enough to recognize that, perhaps, the most "transfer-sale" are listed in "confusing point 20" from the FDD, franchise disclosure document, it can be a fire sale, which represents a loss, you may lose the entire investment to launch a franchise that was originally financed and built and operates a physical unit that has failed and now, having failed, there as only a "Transfer-Sale" in paragraph 20 FDD.
Just like the real end of the column in paragraph 20 FDD requires no reason to end (original FTC rule requires that the reason given for the terminations) The transfer of sales column in section 20 of the FDD also reveals there is no reason for the transfer of sale, and because franchisees who do not understand the franchise business model assumed that the "Transfer Sale "the franchise is a positive event in paragraph 20 of the franchise dealers. Expansion of the system as specified in section 20 of the FDD eclipsed churning in the absence of units in section 20 transfer of sales column translates to the sustainability of the franchise in the eyes of the naive and inexperienced for the first time the franchise investor.
of regulators, state and federal, never checked the accuracy of the disclosure document (FDD) if there is no objection, since the franchise and the regulators themselves may not even know for certain if all the transfer-sales and endings are actually listed, as required by law. Even if they are not listed, and it was discovered regulator, after investigation, it was only an administrative violation of FTC rules, and not an effective fraud, because there is no private right of action for violations of FTC rules available to the franchise when they signed the adhesive in the package with inadequate, incomplete and ineffective franchise disclosure document (FDD) is authorized by FTC rules and FDD, who managed the sale of franchises to the public. Interestingly, regulators, state and federal have deniability that they know that a third party churning takes place when they appear in paragraph 20 of the franchise disclosure document.
Third-party churning, as supported by exploitive franchisors, and the "establishment" franchise failure, and other generational franchisee failure is hidden under the FTC Rule and the Franchise Disclosure Document (FDD), because it does not "establish a franchise "many franchise systems often do not give their work away in a fire sale of its tangible and intangible assets (gross sales) to a third party straws that lie on the acquisition of units in the absence of starting a fire sale. The establishment of the franchise, and second-generation franchisees give their business away to be out from under debt is long-term personal guarantees about the franchise, lease and equipment lease improvements, etc., which may ultimately drive them into insolvency and bankruptcy if they do not get out from under their lack of business and reduce its large and continuing operating losses of enterprises.
franchises are between a rock and hard place when they are exhausted, the estimated startup costs (initial cost as advertised, unfortunately, not be substantiated with facts existing franchisors) and franchises may have used or borrowed even more money, but still losing money every month and failed to reach breakeven status, even after months and years trying to break even. Franchisees are then willing to give their business away in a fire sale due to closure and walking away may make a bankruptcy when certain personal guarantees accepted by the courts and the verdicts against their personal assets (their homes or retirement savings) are honored and "failure fee" is in danger franchise. Otherwise you give the franchise its business away in a fire sale in order to cut their losses and save themselves from personal bankruptcy, when possible. But unfortunately, if they can save you from bankruptcy, they must still pay at the beginning of the debt for many years.
the establishment of a franchise by franchise, and subsidized by a third party franchise, which has bought the business assets of the franchise almost ništa.Treće May be able to reach break even, or perhaps because of low profits or zero-cost investments and reduce overhead. and May be able to sell the company to wash, or a profit after several years of work and an increase in gross sales. Or, again, at least .. the failure to break even a franchise can give the job away in a fire sale to another third straw, if and when a franchise wants to retain the benefit of tangible and intangible business assets to serve the system, and the other franchisees, who gets a cheap deal, wants to try to rebuild the business break even . Or, the unit can be shut down for good.
If you did not inform its franchisees, franchisors that they are losing money every month and can not afford to stay in business, and will have to be abolished by a certain date, and will cooperate with the "termination of proceedings" franchise and continues to treat this as an abandonment of the small print of the contract. Exploitive and churning franchisors will investigate to determine whether it already holds the franchise to run a credit and would then trigger the download did not work by posting a third-party prospective franchisee to the bank that holds the holds the initial loan to bid for the property and release the title of the property failing business. Obviously, banks have tended to be small this leads to the title of the property is not doing business with third parties because the bank can still continue to try to collect the balance of the loan if the franchisor has any other property, in or outside of bankruptcy, and / or loan is guaranteed by the SBA. In addition, franchisors may delay approval of the fire sale to third parties by the delay of normal sales process to the point where the franchise can penetrate into bankruptcy and default on the loan, and the device can then be acquired for much less money by a third party standing.
No one knows or cares, apparently, how many thousands and thousands are starting a franchise have churned continue to pay the debt and start subsidizing franchisors and franchisees of the second generation (third parties). They do not show up on credit default lists. Nobody cares about the other thousands who have been silenced in personal bankruptcies, a five percent or less who survived to courts and who are not doing well, because the courts as regulators do not have to recognize and acknowledge the churning that third-party management of churning is the practice of some franchisors ..
Obviously, directly churning and churning out third-party activities that contributed to the growth and longevity of our franchise gospodarstvu.Treće the straws have a better chance to be successful, because they bought a new unit start for almost nothing, and typically reduce their overhead, etc., through direct negotiations with the landlord, who will negotiate with third parties, and reduce the rent to keep the tenant when the landlord understands that franchise, i'm not going to exercise the option (included in the lease of the annex) to assume the lease and purchase of assets sold to other franchisees.
churning and exploitive franchisors are in a position to take advantage of the owner, and when to encourage third-party churning through direct negotiations by the third party landlord. Landlords sign lease addendums in the franchise agreement that gives franchisees the opportunity to take or not take over the lease in the event of early termination of cooperation between the franchise and lease agreement because they know it's the only way the franchise will be authorized to purchase and operate a franchise - and they should be tenants in shop fronts. Franchisees, who are failing and who read their own contracts falsely believe that franchisors will directly assume the lease and acquisition of property (fire sale) for sale to third parties standing, if you want to keep their gross sales and goodwill built up by failed / not a first generation franchise .
Most others have supported the takeover by the franchisor through "penalty clauses" in the small print franchise agreement approved by franchisors on the "lost compensation fee" or some sort of punishment for zatvaranjeposlovanja before the expiry of the contract. Generally, almost any "early" termination (other than death) is considered "abandonment" of business on the small print of the contract, even if it is "retired" from the franchise is to prevent / avoid insolvency and bankruptcy for rezanjetijeku losses and negative cash flow.
Obviously, a clause in the glue franchise agreement which authorizes the "lost compensation fee" to leave (early termination) also, it is intended to keep the franchise in their contracts and keep the franchise to operate their businesses to achieve breakeven and stand on a breakeven situation no real gain or as an incentive not to try to sell their franchise breakeven but unprofitable business to another franchisee, whenever possible. (All franchise agreements require franchisees to acknowledge his signature on a contract that they promised to "get" the work of the franchise. Deductibles can not just quit and walk away from his ten year contracts, because there are no real profits over and above their overhead, operating expenses and debt service )
The third party support (the franchisees) acquisitions, failed / not to start a franchise often threatened to "lost compensation fee" of several thousand dollars, unless they agree to engage in some sort of management agreement (the second adhesive contract) in which a third party who is standing, you can try a job, start a franchise and the original remains responsible for rent and other obligations that have been personally guaranteed, and where the third party agrees to sublease from the original starting a franchise whose personal guarantee of the lease will continue be effective in the case of a third party (being a new franchise) can not be granted a franchise by franchise, or if a third party (being a new franchise) decided after the expiration of the contract for the management does not want to purchase the assets of the company.
Again, not to start a franchise can range between a rock and hard place because if it is not a franchise does not agree to sign a contract to manage and agree to immediately download a third-party business, in the absence of a franchise is advised that you "lost royalty fees" will not be forgiven by the franchise and will immediately leave work and the conditions will come into play and personal guarantees to a malicious term franchise agreements and leases will be due immediately as dobro.Sudovi will spend the terms of the agreement and personal guarantees, and conviction against any that the property is still held is not a franchise. This situation can be managed to throw / no franchise in personal bankruptcy. Obviously, the franchise knows that this is an offer that the franchise can not afford to refuse! (I suggest that franchise agreements are malicious, because franchisors are aware that 50% or less of your new franchise will not make it past five years, but insists on ten year contracts, and often rent the game to be personally guaranteed personal property franchise, because it increases the total debt that was personally guaranteed by increasing the pressure on the franchise to give their business away to third-party supported a fire sale when they fail to thrive after exhausting their starting funds and loans, etc..
supported a third takeover offer the advantage and the third party since the franchise and Franšizodavci.Franšizodavci benefit because they do not have to disclose the failure rate of "launching a franchise" for new customers as it would be necessary if the franchise was not acquired directly "run "unit, and re-selling them on the market. In addition, franchisors that encourage third parties to avoid churning all the dangers and do not have to explain the sale of transfer of the columns in the FDD, which are hidden buttermilk (the real risk of buying a franchise) from potential buyers and from the view of judges in the litigation before the courts.
Franchisors also use third parties when taking encroached on their franchise and produced the franchise businesses that operate close to zarade.Franšize are forced to compete for a place of death and the success of others, who will get the loser of the business for nothing, if he wants it, and maybe even survive, unless the franchisor once again rising to satiate the territory to compete with other franchisors in the same sector.
"churning" franchise requires a release of liability for a fire sale, if and when completed, both the original franchise, the seller, a new franchise (supported by a third party) and require a confidentiality agreement to the terms of the sale as a condition for approval of a franchise sale franchise business assets and franchise rights to the state since the franchise. Of course, the franchise can not make any contractual arrangement with the straw to the franchise as long as there is agreement with the new conditions. While confidentiality agreements are now to be published in the FDD, the contracts are still held by the courts and due diligence with section 20 references that have signed confidentiality agreements remain inefficient and ineffective for prospective buyers for concessions.
most unfortunate repercussion of what is described above is that it is still quite invisible to a new franchisee, in good faith the establishment of a franchise, in which franchisors back losses on the basis of profits to build. It is behind and through the influx of new start-up capital of the new franchise to non-performance of individual units setting up a franchise is hidden. Compounding the churning contributes to dramatically reduce the "ultimate cost" and "sales price" of many / most franchise units in the franchise system - in essence, producing pseudo-success for new franchisees who are buying "used" concession "cheap" because the normal start-up and breakeven costs associated with any new start business are reduced through the practice of churning start a franchise on the brink of failure.
new franchises usually do not realize this fact until it is too late. At a time when they realized the truth, it is impossible to escape so they are forced to the bitter end of the bankruptcy and destitution or subsidizing franchises and new franchise for many years to pay off debt to start.
Those franchisees succeed in a franchise system because they are cheap and bought the franchise to avoid the costs of starting and / or because they were in 50% of franchisees that are still standing and successful past five years, or 29% who actually survive past ten years, we are lucky to have never faced the hard realities of third-party churning ..
the lesson of this paper is that it is probably always better to be "sucking straw" and "system suckup" and used to buy a franchise than a new bona fide franchise that bought the franchise rights and finances and builds a business where the franchisor is hanging his brand name and take your profits right from the top -. Whether or not you ever make a dime in profit or whether or not even survive