Franchise Workouts, a Different Beast but Successful

Many franchise businesses are getting very hard hit by this recession. One reason is the very nature of the franchise equation, you pay royalties based on gross revenue not net profit, thus even when your revenues decline and your profit disappears your fees are a percentage of your gross, possibly forcing you deeper into losses that cannot be sustained. It is a built in time bomb waiting to explode, and they are exploding all over the country in every manor of franchise business.

We have successfully done workouts in many franchise businesses and can tell you from our experiences that franchisers who were once unmovable forces previously unwilling to adjust or forgive anything are now changing their attitudes.

While not universal, as each franchise has its own unique peculiarities, many are becoming more acceptable of our workout efforts. This means they are more willing to discuss, negotiate, reduce or even eliminate transfer fees, and other built in charges and expenses in selling, re-organizing or working out the defaulting franchisee debt.

Franchisers are now more interested in preserving the franchise and, thus, are more supportive and flexible as they want the continued revenue flow from an ongoing business more than they want one time hits on transfer or refinancing or renegotiating arrears.

There is a fairly wide spectrum of responses to this matter from different franchisers but the general word is new found flexibility and reasonableness. I know it is shocking, but many franchisers are losing so many franchisees they need to stop the flow of their losses and preserve their valuable cash flow.

Furthermore, in some instances, we are finding that franchisee owners are more willing to jettison the mother ship and without the support and name convert to privately owned and operated small businesses doing the same or similar business but no longer out of the franchise environment. This too is working out well.

Franchise owners need no longer hide in fear of the retribution they anticipate from their franchisers under the extreme circumstances they find themselves in, during this down economy. Call us, explore your options, you have few alternatives to support your survival, we have the plan.

Call us and we will arrange a no obligation teleconference to discuss your options.