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1. Who Are You Dealing With?

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You can tell a little about a franchisor by knowing who the “sales force” is and how it “sells” its franchises. Is the seller a director, officer, or key employee of the franchisor? Is the seller employed directly by the franchisor or has the seller otherwise worked exclusively for this franchisor for a reasonable time period? Is the salesperson on “commission,” meaning he or she gets paid when he or she “closes a deal”? Is the salesperson part of a brokerage network such that if you are not keen on acquiring a coffee franchise with headquarters in Seattle, the seller can sell you an extremely successful chicken concept hailing from Toronto, a low-carb wrap franchise catching on in Boston, or a pizza franchise with headquarters in Edmonton?

It may be that once the sales process has been concluded, and you have “bought in,” the friendly and charming people who “sold” the franchise to you have somehow stopped returning phone calls and emails, and have moved on to the next customer or the next up and coming concept. To your surprise and trepidation, you must now deal with perhaps a less-than-friendly president of a less-than-friendly franchisor who has just quit smoking, suffers from gout, employs field personnel comprised of former wrestlers, and watches The Apprentice to relax. Needless to say, you may discover a change in the corporate culture from the charming and helpful sales force. In other words, you may have to deal with reality, and the reality may be different than you expected. It is important then, for you to know whom you will inevitably be dealing with in the franchising relationship and, to the extent possible, to be comfortable with those persons. If you aren’t comfortable, why would you proceed?

Some franchisors have instigated what is euphemistically referred to as a “debunking” session (or a “discovery day”), whereby, prior to the execution of the franchise agreement (but after a deposit agreement has been signed, a deposit provided, and the prospective franchisee is ready to “sign on”), the president or senior managers of the franchisor send the sales force “out of the room” and tell the prospective franchisee words to the effect that, “I don’t know and I don’t care what he told you. He’s just a commissioned sales guy. This is the way it is in this franchise. There are no guarantees you are going to make any money and it’s hard work. And by the way, sign here, acknowledging that you understand this.”

These sort of debunking sessions serve as a “reality check” for overeager franchisees who have been won over by the sales process and the salesperson, or have otherwise sold the deal to themselves. But these sessions also assist the franchisor by allowing a franchisor to claim that there were no representations or warranties made to the franchisee that weren’t contained in the franchise agreement (i.e., “I told him the way it was”).

Buying a Franchise in Canada

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