http://www.bbb.org/

http://waco.bbb.org/WWWRoot/SitePage.aspx?site=40&id=ab5100aa-4c5a-4314-8e1b-f5996973f10c

http://www.oag.state.tx.us/consumer/index.shtml

http://www.ftc.gov/bcp/index.shtml

You are right that all businesses have a failure rate but when you are investing in a franchise, shouldn’t the franchisor have the obligation under the law to disclose the “failure rate” of units in the system that is KNOWN to the franchisor. Instead of doing this, in bad times, when business is slow, franchisors try to sell more franchises for the purposes of maintaining their gross EBITDA upon which they make their profits. As long as they can sell new units out the front door and failed units out of the back door, they can survive recessions, even as many franchisees fail and lose their entire investments.

Apparently, the Rule that governs disclosure in franchising permits franchisors to NOT disclose this material risk factor to new buyers of franchises. If prospective franchisees did know how many franchisees had failed with the “proven” plan or were not making any actual profits, not as many would invest to begin with. This, apparently, is why the government doesn’t make the franchisors disclose the failure rate or profitability possibilities —-because this would inhibit the investment in franchises and slow the economy even more.

Catch 22! http://w.w.w.unhappyfranchise.com/2009/02/carolcross/

…people that fail almost always want to blame someone else instead of themselves…
True. That’s why I urge people to do proper due diligence and think it through before taking the plunge. SBA default rates are one resource to look at in seeing which concepts are failing.

Have you owned one?
Sort of. My taxes paid for the debt on some that failed.

Would like to hear from people doing well for a change not just ones that failed.
Me too.

As a successful franchisee, you feel that it is unfair that failed and failing franchisees are “knocking” Curves. This, of course, is a predictble situation that always protects exploitive franchisors whose successful and standing franchisees don’t like to see their asset, their business, attacked in a public forum.

All the evidence indicates that franchising was regulated to PROTECT franchisors and THEIR successful franchisees from those franchisees who would fail and would believe that the franchisor fraudulently induced them to contract by false promises.

Those who are in NEED of a job and an income do risk more than they can afford to risk and yet the risk of the investment is obscured by the red herring of ineffective regulation that was intended to subsidize franchisors and protect them from charges of fraud by failed or failing franchisees. Franchising has always grown during recessions because of the desperation of those who need jobs and income and are willing to invest in themselves, and can be sold The American Dream by those who want the commissions on the sale of the franchise.

The ineffective regulation together with the subsidy of the franchisors and the banks of SBA loans does render franchisees merely as expendable resources for franchisors who then can beat the KNOWN ugly odds of the failure of all small businesses.

There is cooperation within the status quo to obscure these odds from the view of prospective buyers of franchises who sign malicious long-term franchise contracts with the franchisors, who know that a certain percentage of franchisees will perhaps have little chance of ever making any real profits, and that a certain percentage will actually fail.

Shouldn’t franchisees know upfront what the odds are up front and should government be subsidizing banks and lenders and franchisors under the guise that this serves the “public good” when this subsidy produces so many victims?

Are you indicating that if a franchisor has 50% of units that fail and 50% that thrive, that the 50% who fail should be sacrificed on behalf of producing the 50% who succeed. And, if you are. Shouldn’t the odds be disclosed up frant?