This is where a franchisor sells a site or territory that cannot turn a profit then sits back and waits for the business to fold.
The franchisor reclaims the site for a nominal price and resells it to another franchisee who inevitably fails a year or two down the track.
Each time the franchisee spends up to $450,000 buying what he or she believes is a viable business and ends up paying another agreed amount (usually about $50,000) to the franchisor for marketing fees. Royalties and annual franchise fees, which range from 5-20 per cent of revenue, are owed on top of this.
For complete article read: Major Franchsie Brands Accused and Whose Fault Is It Anyway - Griffith University
The franchisor reclaims the site for a nominal price and resells it to another franchisee who inevitably fails a year or two down the track.
Each time the franchisee spends up to $450,000 buying what he or she believes is a viable business and ends up paying another agreed amount (usually about $50,000) to the franchisor for marketing fees. Royalties and annual franchise fees, which range from 5-20 per cent of revenue, are owed on top of this.
For complete article read: Major Franchsie Brands Accused and Whose Fault Is It Anyway - Griffith University
