Bullying Not Key Factor in Franchisee Insolvency
“We are all appalled by franchisee stories of bullying, intimidation and unethical behaviour by franchisors, particularly franchisors who, like me, genuinely want their franchisees to succeed.
“But prospective franchisees need only look at the daily press to see examples of unethical behaviour in the broader business community and recognise the need to exercise caution, regardless of business structure.”
Shugg said the biggest issue for any business was financial failure, which had a number of root causes, including poor management, lack of owner interest, personal crisis, over-reliance on too few customers or suppliers, theft and fraud.
“Franchisees who believe that buying a franchise will indemnify them from the possibility of failure are seriously mislead.
“So too are franchisees who base their decision to enter into a franchise agreement on emotional reasons, like their love for the product, brand or concept.
“Business ownership requires prospective owners to make clear-headed, unemotional decisions concentrating on what they want out of the business,” she said.
Shugg said that the secret to a successful franchised business was franchisees with the right combination of skills, qualifications, ambition and courage, combined with quality franchisor offerings, like marketing and advertising programs, discounted products, systems and brand recognition.
“Nothing, not even greater disclosure, will protect a franchisee who joins a franchise for emotional reasons or who is unable to manage the daily pressures and challenges faced by all business owners.
“So while I believe franchisor bullying has no place in the franchise system and should be dealt with swiftly and harshly, bullying itself is only one factor, and not a key factor, that impacts on franchisee’s ability to remain solvent,” she said.
Award Group Australia offers franchise opportunities for small business operators with extensive accounting experience and/or qualifications. Franchises are available nationally, also with Award Bookkeeping Company , a bookkeeping franchise and home based accounting franchise. 15.05.2008
FCA Member
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Tel: 1300 130 343
Fax: 03 9727 1080
