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Franchise Opportunities and Negative Reviews

By: Bill Bradley

 

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You’re researching franchise opportunities and you see a negative review. What does this mean to you as a potential franchisee? What does it tell you about the business?

 
It tells you that the business exists
 
Honestly, businesses fail. The majority of new businesses close within five years, according to government figures, and half of those failures are within the first 18 months. Only just over one quarter of businesses are still around after 15 years.
 
Look just at franchises and the numbers are better, but there are still failures. And when someone fails with a franchise, they may express their grief by writing a scathing review about how that franchise is a scam.
 
Read those negative reviews, of course. Google the name of the franchise you’re considering and add “is a scam” or “nightmare” to it in order to see all the most negative things you can. Then look at the negative reviews with a critical eye:
 
  • How much of the complaint is emotional (“Don’t give your hard-earned money to these liars!”) and how much includes facts? A franchisor who doesn’t care about you, only wants your money, and ruined your marriage (all common themes in negative franchise reviews) is quite different from a franchise that failed to follow through on an agreement, misrepresented the level of skill needed to succeed, or has extremely high turnover in their management.
  • Look for clues about the franchisees. Do you see a lot of comments about how the franchisor didn’t support the franchisee when the company didn’t turn a profit and was unable to pay their fees, how the franchisee wasn’t able to raise enough money to open the store, or that the company pestered them about non-compliance with the agreement? Small business failures often result from a lack of capital, a lack of knowledge and preparation, or a lack of skill in execution. Those things are not the fault of the franchisor.
  • Check the facts. Few of the negative reviews at websites specializing in franchisee venting contain any facts. If they do, check them with reliable sources or ask the franchisor to clarify them for you. Then consider what they mean to you. A franchise that doesn’t provide a lot of hands-on support might be perfect for you if you like to have control over everything yourself, while it would be a serious negative for someone who likes to have plenty of contact and mentoring.
 
Sometimes a franchise and a franchisee are not a good fit. Sometimes a franchise is not providing the quality system they claim to provide. And sometimes the franchisee failed, as many  business people do. Careful reading can tell you which is true for a negative review—before you make decisions based on it.
 
This article was originally published by America’s Best Franchises
Published: October 23, 2013
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Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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