A number of once-thriving franchises are facing disgruntled franchisees, store closures, bankruptcies and never-imagined marketing scenarios.
In their recent Better Your Business special report, “How To Steer Clear Of Franchise Financial Disasters,” CNBC.com’s Zac Bissonnette speaks with an unnamed Quiznos franchisee who summed up his experience: “There has been a decline in support. The corporate and field office support staff has shrunk. We are having a lot of issues with food quality and consistency.”
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Bissonnette points out that even as the operational help at Quiznos has taken a dive, the entrepreneur is still required to pay his royalties as usual. “That is taking a toll on his bottom line, since sales are plummeting as Quiznos reduces its national marketing efforts,” he writes. The franchisee Bissonnette spoke with admitted, “I think it would be safe to say that the majority of the franchisees would like to leave, if they had a decent exit strategy.”
Quiznos’ corporate office tells CNBC that it has moved to shore up franchises with various lifelines since emerging from bankruptcy, “and we’ve seen immediate results.”
Bissonnette writes that in a statement, Quiznos said that it was “pleased with the support and initiatives to date and look forward to more success as franchisees better realize results of these changes.”
Bissonnette closes his CNBC.com post by noting that franchise experts say that too many franchisees go into business without doing enough research into the company they’re getting involved with. Here are some tips for avoiding franchise disaster: 1. Know your franchisor’s financial status, 2. Check the franchise agreement for obligations, 3. Look at the SBA loan default rate and 4. Investigate the history of litigation.
Bissonnette’s post also includes slideshow, “10 Famed US Franchises That Faced Financial Ruin,” which gives a brief history of the perils faced by Quiznos as well as Krispy Kreme, Mrs. Fields Cookies, Sbarro Pizza, Friendly’s, Blockbuster, Bally Total Fitness, Bennigan’s, Chevy’s Fresh Mex and Perkins Restaurant & Bakery.
Read Bissonnette’s full CNBC.com post here.
For more insights into the franchise-seeking mindset, check out our related posts, Before Investing, Interview Franchisees, Mitigate Your Risk By Hiring A Franchise Attorney, A Franchisee Discovers The Fine Print’s Finer Points, Franchise Coach Sees A World Of Opportunities, If You Ask The Right Questions, These Sliding Franchises Must Get Back To The Basics, and Let Your Franchised Business Soar! But First, Get Grounded In Franchise Legislation.
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