NZ franchisee willing to sell $830,000 store for $1

August 27, 2008

An interesting story on the true value of a franchise.

  • From a strictly financial perspective, most franchises have a negative net present value (ie. they actually produce a decrease in capital rather than an increase).
  • Investors are for the most part, very very inaccurate in their appraisal of franchise offerings. They are successfully encouraged to deceive themselves.

This follows up on my original August 8th posting called Tied buying creates a Hidden franchise fee.

Hell has been torture for Matt Blomfield – so he’s auctioning his $830,000 Auckland store for a $1 reserve.

Mr Blomfield, a Hell Pizza franchisee, is so fed up with the New Zealand owner TPF Group’s handling of the business that he’s willing to take a loss selling up his five stores.

“I just want to get the business sold, pay all the bills and move on with my life.”

The reporter Errol Kiong goes on to mention:

The Herald has also sighted emails from franchisees complaining of the lack of support from TPF, the high cost of ingredients – which they can only purchase from TPF’s own supply and distribution operation – and what they say is unsatisfactory marketing.

Ineffective marketing, lack of support and franchisors gouging franchisees on supplies are very, very common problems cited around the world.

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