This is particularly true of ones that converted employees to franchisees.
That changes once franchisors listen to their bankers explain how much they both can make (ie. interest kickbacks) if they leverage as many franchisees to the teats.
The primary control method of newer (maybe more formally educated?) franchisees is debt. Hundreds of thousands of supportable debt, if the franchisor who controls their gross margins, lets them service their debt.
- prime plus 5% (“love to give a better rate but it’s unsecured, don’t you know“),
- immediately callable (demand loan = short leash),
- plus personal guarantees up the wazzo (“just need the missus to okay the paperwork…“), but
- secured by NOTHING but the franchisor”s “good faith” (ok as long as the present management stays put but all deals are off if…).
If you want to unlock the chains, start asking your “preferred” lender some questions (on a public blog, btw) about their lending duty under the Bank Act.
Franchise bankers: a breed apart.
- Franchising Opportunism, Les Stewart