Franchisees’ Customers lose everything*

This trustpilot review by a customer of Dream Doors, part of the Neighbourly group, got me thinking about what other Franchisors would do in the same situation. The deposit customers pay upfront for the goods or services they are buying in many franchises is 50% – 100% of the total order value and in the case of high value products like kitchens, bathrooms, shutters or blinds can end up being tens of thousands of pounds.

The customer in this review highlights some really critical points including, that many customers are not aware when purchasing goods, they are buying them from the local business rather than a National company with deep pockets.

In some circumstances customers can mitigate this risk by paying with a credit card but this assumes the company accepts credit cards, and the customer’s credit card limit or available credit is above the transaction value (Section 75 claim for transaction value between £100 and £30,000).

This issue raises a really important issue for the Franchise Industry. Would other Franchisors consider refunding customers deposits? What about settling any debts with suppliers? After all, many suppliers supply the full network of franchisees. Should Franchisors be taking out insurance to cover these eventualities? Should the Franchise Industry be doing more to highlight these risks to customers?

If your policy would be to step in and bail a customer out is this because of a contractual obligation or a gesture of goodwill?

I have heard on good authority that the likes of McDonalds would always step in because this would damage the brand and its relationship with its customers, suppliers and banks, which Franchisees rely heavily on.

Is there more the Franchisor should be doing to pre-empt these types of issues ? After all, Franchisors have access to Franchisees accounts and in many cases are in a position to foresee these types of events.

We need regulation of the Franchise Industry in the UK so that, amongst other things, customers have visibility of the turnover of Franchisees which would in turn provide them with a better view on the risk of any transaction with a Franchisee.

Please enter your email below if you would like to receive future posts about the Franchise Industry

Details about the author and his experience of being a Franchisee can be found here. Just to be clear, the authors’ views expressed in this blog are exactly that….his views, based on his personal experiences, by connecting with many current and past franchisees of many different Franchisors and through his own market research.

See below for links to some of my earlier blogs;

*Based on independent customer reviews published on Trustpilot

#theperilsoffranchising, #franchise, #franchisor, #franchisee, #franchising, #franchiseagreement, #BFA, #britishfranchiseassociation, #qfa, #qualityfranchiseassociation, #mcdonalds, #dreamdoors, #neighbourly, #neighborly, #departmentforbusinessandtrade

Leave a comment