Franchise nightmare...
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Karen Miles (CM 25-31 July) deserves congratulations on sounding a warning note on the downside of franchising and having the courage to speak out against the usual eulogistic press-supporting franchising.
The message has often been that franchising is the great business success story of the last two or three decades but I know, to my cost, that this is not always the case. I held a franchise with ANC for 14-and-a-half years until last November, and therefore Ms Miles' article was of special interest to me as ANC's managing director was quoted and I would like to respond to those comments.
Mr Callaghan states that ANC franchisees should earn a net profit of between 6 to 10% and that depot turnovers are between £750,000 to Om. The word "should" is the key word here since my experience in ANC was very different.
Mr Callaghan says: "There needs to be quite a strong agreement between the parties so that if things don't work it can be sorted out." I am not sure what he considers "a strong agreement" to mean in this context, but in over 14 years I had three successive agreements, each written by ANC and each subsequently replaced or attacked by ANC, which had decided that the terms of those agreements were no longer appropriate.
When I failed to resolve my company's contractual difficulties by discussion and negotiation with the franchiser, my franchise came to an end.
There is now litigation between my company and ANC and we expect our differences to be settled by the court, but this is such an unsatisfactory way to conclude a long franchise and a totally destructive and expensive way of resolving commercial disputes. It seems that franchisees have enormous power if they act together, hut on a one-to-one basis the franchisee is usually at a great disadvantage with the strength in the agreement vested in the franchiser.
The British Franchise Association recently voted for a mandatory standard form disclosure notice by members to prospective franchisees but, while this is a welcome move, it is but one small step in the right direction (not least because it only applies to BFA members, which ANC is not) and legislation protecting franchisees is necessary to ensure franchising's good reputation is fully deserved.
R J Griffiths, Bristol..