How do we stop a particular franchisor from continuing to deceive more franchisees in the future?
Opinions expressed by Entrepreneur contributors are their own.
I am an ex-franchisee who feels deceived by my past franchisor, along with many other franchisees of this particular system. In hindsight, there were warning signs and we just didn't know enough to realize that they were being misleading, etc. Even though most of us spoke with existing franchisees, those franchisees felt pressured to lie in order to bring on more franchises to add to the ad fund that would grow the business. Currently, we are gathering and have contacted a franchise attorney. The most important thing we would like to see is for this franchise to be stopped!If you feel that you and/or others have been deceived or mislead by a franchisor, there are three types of actions you can take to try to address the situation. In order of priority (primarily based on cost) I think they are as follows:
1. Contact the franchisor with your grievances, either individually or as a group. I'm assuming that you've already done this, but if you haven't then this should be your first step. If that doesn't do you any good, which it sounds like might be the case for you, then move on.
2. Contact associations or governing bodies to try to get relief. If the franchisor is a member of the International Franchise Association, you can try to file a complaint with them and see if that gets the attention of the franchisor. In the alternative, you can file a complaint with the FTC at the federal level or with the state agency that governs the activity of franchisors in your state. The franchisor is much less likely to ignore a call from the attorney general of a state or from the FTC than they are from a franchisee.
3. If these steps don't work, you can contact an attorney. If you do so, make sure that the attorney specializes in representing franchisees and check references. In terms of costs, you might also inquire as to whether the attorney is willing to take the case on a contingent basis as a way of measuring the validity of the claim or the attorney's feelings about the likelihood of prevailing.
On a final note, make sure to inquire about the ability to form a group for any legal action -- many franchise agreements have clauses that make this type of group action very difficult to pursue.