Protecting yourself as a franchise owner

We are having a really worrying and sad situation unraveling on a daily basis right now with Australia’s Allied Brands, the publicly listed franchise company that is the operator of the Baskin Robbins, Cookie Man and Kenny’s Cardiology, amongst other brands.

Now with me not being at all close to, nor having had anything to do with Allied other than eating the occasional ice cream with my boys, I can honestly say I am mostly just a very interested yet concerned observer of what is happening. But this much seems clear to me:

  • Regardless of all the claims of potential economies of scale, the brand stable shows a lack of focus by the franchisor,
  • I can’t see how resources can be most effectively & efficiently used with that lack of focus,
  • I’d reckon field support staff would have been stretched beyond their limits and capacity to help franchisee’s as much as they wanted to,
  • There is a huge amount of angst within the business that has been building for some time.

So the Cookieman brand with its 50 stores is in liquidation and up for sale, and Baskin Robbin’s as I understand it for Allied Brands, is either in the process of, or at least in serious danger of loosing the rights to operate that brand in Australia.

So How Do You Protect Yourself?

By “protect yourself” as a franchise owner, I mean protecting your investment in your business to ensure you get your targeted return – just as any investor should.

My best advice to protect your self is two-fold and simple:

  1. Continually hold your franchisor accountable to their obligations and commitments, and
  2. Continually allow your franchisor to hold you accountable to your commitments and obligations.

No franchisor worth their salt should be afraid of being held fairly, maturely and professionally accountable if they can expect to be able to do the same with their franchisee’s.

Now this is a fair deal.

Keep in mind though that we are all human and some things are not always going to work out how we planned or wanted. But we can also all quite easily judge the merits when this happens.

What this arrangement does is that it ensures that both parties are focused equally on what really matters – growing each individual franchise business, which in turn gives strength to the entire system.

My Read So Far

My reading (and it appears that of the media) of the Allied Brand’s mess so far is that accountability is a significant issue. Where this will end up is anyone’s guess but I think we are in for some very eye opening allegations, action and discussions in the foreseeable future.

I just hope that the value of the many individual businesses involved can be protected as much as possible through careful and considered actions by all parties involved.

2 responses to “Protecting yourself as a franchise owner”

  1. Peter McLaughlin says:

    I agree with your comments Glenn. Another aspect is for franchisees to make sure they investigate the franchisor carefully before entering into the system and understanding the risk of franchisor failure (which unfortunately has now happened 3 or 4 times in recent years)and take advice as to how to manage that risk as best they can.

  2. Glenn says:

    Thanks for contributing Peter, agree and can also see it being a hard thing to spot for a franchisee buying their biz.
    It does come down to the fundamentals of the system – good independent advisers are the key. At the same time, in my view nothing is as effective as speaking directly with as many franchisee’s as possible to see how that system is performing in the things that make a difference to them……

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