International Law

Craig Slavin's Excellent Franchise Tip!

Craig Slavin writes that Company Owned Stores a Must for Franchisors.

When I created the Franchise Gold 100 survey for Success Magazine one of the requirements was that a company, in order to be listed and considered, had to have at least one company owned and operated location.

The reason for this is simple.

There are two distinct marketplaces. The first is the consumer level where a company delivers or provides a product or service. The one thing I know about any business, before knowing anything about that business, is that business will change over time. Consumer tastes, demands and needs change as well as external influences from competition, the economny, etc. all contribute to a fluid marketplace and not a static one.

The second marketplace is the franchise level. This, as we all know, is where a distributed work force is created to provide more products or services to the end users - the consumer.

If the concept never validates or exists in the consumer marketplace it certainly cannot and should not be franchised.

Item 1 of the UFOC will clearly disclose whether the franchisor has any corporate stores.

Here is a sample answer:

"To simplify the language in this offering circular "Belmont" means Belmont Mufflers Inc., the franchisor. "You" means the person who buys the franchise.

Belmont is a Minnesota corporation that was incorporated on September 3, 1963. Belmont does business a s Belmont Muffler Shops. Our principal business address is 111 First Street, Jackson, Minnesota 55555.

Belmont's agent for service of process is disclosed in Exhibit _____.

Belmont currently operates 12 Belmont Muffler Shops and sells pipe bending machines and mufflers to various muffler shops. "

One of the drawbacks of the current CALEASI database of Franchise UFOCs is that there is no way to filter out franchises based on certain criteria -like whether they have any corporate owned stores or not.

Full post as published by Misleading Advertising Law on February 13, 2008 (boomark / email).