Franchising or Independent Dealer - Are You Buying a Job?
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Many people who buy a franchise think they are buying a business of their own. In many regards it does resemble your own business. But in reality you are leasing or renting a business. Many who are Independent Dealers are also generally buying a job more than buying a business. Recently a think tanker type who is also a CPA stated that;
“I have red over more than a few of these independent operator agreements. Many of these independent operators are nothing more than gas station attendants.”
Indeed and like 7-11 “adapt or die” attitude, as the Master Franchise from Japan said after he bought out Southland and told the dealers; “Now you do it our way!” So in essence all 7-11 owners are nothing more than employees who had to pay to buy themselves a job.
Having written franchise agreements, I can say that the boilerplate bandits out there often have clauses which look more and more like those independent dealer or operating agreements the CPA discusses and has read over. I was a board of Director member for the American Association of Franchisees and Dealers AAFD for two years, you see a lot, I’ll tell you that.
Some of the history of the franchised gas stations, SBA loans and operators coming over after the fall of the Shaw of Iran are certainly interesting. Many of those folks came over with cash and bought into a business of their own which they knew and understood; oil.
The CPA further states that; “Many of them only lease the building and equipment owned by the oil company, and the “franchise or other operating agreements” are often NOT designed to empower the operator.”
Sure and we know Ray Kroc told a Harvard MBA class in a speech that McDonalds was not in the hamburger business it was in the real estate business. Now a-days franchisees sign a master lease with the franchisor and often the franchisor is a lessee between the franchisee and landlord; that is if the franchisor does not own it out right. So if you are considering a franchise of your own or becoming an independent dealer, you may wish to consider what you are getting into?
Author Lance Winslow runs WorldThinkTank.net.