Image via Wikipedia
Some of the worst abuse in this sector takes place with the franchising of franchise consultancies - businesses that are supposed to assist non franchised business transition to a franchised business.
According to an article in Crain's Manchester Business: The Franchise Group in the UK is subject to a winding up order - effectively killing the corporation.
"The Franchise Group, formerly based in Knutsford, charged a minimum of £35,000 for "franchise partner" courses designed to equip people to recruit franchisees for client businesses.Earlier this year it admitted to having cash flow difficulties, ongoing legal disputes with some of its former franchise partners and to being investigated by the Department for Business."
This franchise fraud ran for about three years, and less than a 1/2 year ago, it was looking for financing from the public market in Toronto, Ontario.
"Top UK franchise and management consultancy, The Franchise Group, is to seek a listing on the Toronto Ventures Market next year following a £9.7 million takeover deal.A consortium led by UK businessman Jeff Smith acquired the Manchester-based consultancy, which helps successful businesses expand via its unique 'Upside Down' franchising model.
Fellow investor and new Chief Executive, Les Dyson, immediately announced the firm's ambitious plans for growth, including an intention to list the company on Toronto 's TSX Ventures market - a rival to London-based AIM - early next year."
In late 2005, commentators on the Homeworking forum were questioning the economic viability of the Franchise Group.
And a nice history of the The Franchise Group can be found at the UK Business Forum.
So what happens when the Franchisor is both morally and legally bankrupt? Well, you start a new franchise system having purchased the IP of the old system, according to franchiseeassociates, also in the UK,
The Franchise Group has now closed down with debts of about £ 2 Million after being investigated by the DTI, but not before fleecing about 60 franchisees of up to £ 50,000 each.If that's not bad enough, the directors have now set up a Seycheles registered company called TFP World.
This company is essentially doing the same as the Franchise Group.
They sell a franchise consultancy business that is supposed to find companies that want to franchise, help them set up their franchise and then do their franchisee recruitment for them. -
The reality is that they do not find sufficient quality companies that want to franchise and therefore their franchisees lose their money.
Steer well clear of TFP World!!!"
Mr. Dyson told Crain's he was buying the UK master franchise of The Franchise Group for an undisclosed sum and that he planned to take the group forward in a "very different" form. Last week he said he could not be sure he would now proceed with the purchase, and says that he has no involvement in TPF World."
Hmm, selling a franchise whose business is to find companies that want to franchise? Uh, if the franchisor was any good, why wouldn't they find those companies themselves?
/p
An accuarate assessment of TFP World. Steer well clear.