Management
Business Case Study; Franchise Outlet Disclosures
There has always been a big issue in the world of franchising regarding how to count the number of franchised outlets that exist. Many web sites of Franchisor's show more outlets than their uniform franchise offering circular. The Uniform Franchise Offering Circular is the official Franchisor disclosure document, which would be given to each franchise buyer 10 days before purchase as mandatory by law. The number of franchised outlets must be disclosed in that document. When customers go to a web site of the franchising company they may notice that the outlets are numbered by city or zip code and there may be one outlet servicing more than one zip code or city. Or in some instances one franchisee owns multiple outlets and this is often confusing to the franchise buyer who peruses the Franchisor's web site prior to the purchase.
One franchise buyer indicated to me that they noticed that there were 32 more locations listed on the web site than there were in the uniform franchise offering circular. I indicated; Yes, well also consider how many of those were multiple store owners? You see? We use to count all our franchisees who purchased multiple territories as multiple outlets to be fair. Some say this over inflates, yet as you can see by how this might also cause the number of units to be under inflated.
It is important that Franchisors are careful to alert franchisee of the differences and why they exist because many franchisees for franchise buyers may not understand this and they may believe that there is some fraud concerning the differences in numbers. Why might a buyer suspect there is fraud? Well, the consumer has been told by the government that most businesses are fraudulent. And I suppose there are enough examples of corporate fraud that might lead a consumer to believe that.
For instance; We know businesses with questionable characters will do such things. Look at the "Book to Bill Ratios" during the Dot Com days and false earnings reports from so many companies who made computer hardware. Nevertheless, once the differences in numbers are explained to the franchisee or franchise buyer then it will all make sense. And in reality a lot more dishonest business dealings are done from within our government then in the private sector, as there is also enough proof of scandals there. Please consider this in 2006.
Lance Winslow - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs/ |
Lance Winslow
Tags: Business Case Study, Franchise Outlet DisclosuresSimilar articles
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