Franchising the need for regulation

Franchising a case for regulation 

Straight away I would like to say that to my knowledge most of the franchising industry is honest and above board. 

After starting to write about my 30 years as a franchisee I have been thinking about some of the things that go on in franchising and the need for regulation. Below is just one example it is an advert for new franchisee's taken from the franchise companies main site. I would like to add my franchise was terminated after 20 years with the group. I am challenging them through the courts as all reasons were incorrect and easy to prove. I am presenting the facts though and trying not to be biased. I have shown this advert to the British Franchise Association, Mr Electric UK, the worldwide director well president as it is an American company and the President of the group as a whole. This is still on their website though and none of them have replied to me. 

After reading it you may think 

1 People will phone franchisees and learn the truth and not join. Yet 2 people joined in 2018 no one since mind you. They did not seem to call one of the franchisees. 

2 You might also think that once franchisees join they will soon find the truth and sue for miss-selling. 

Well, these franchisees have risked all their savings with many having to take out loans on top. On leaving they will be hit with a leaving fee plus estimated royalties till the end of their contract. Once they terminate this will be made clear in no uncertain terms by expensive lawyers. This frightens the life out of people. They are told as I was that Mr Electric can afford to go to court but can you afford to lose £100,000 legal fees plus their costs. What happens I've heard is an offer is made to reduce the getting out clause if the franchisee signs an NDA. They are also threatened with being sued if they carry on work in the area the same as I was. 

With no regulation, these people have no choice but to go quietly.

This is the advert with my comments in blue. The advert is still running despite the fact I have shown them this post before making it live and giving them plenty of opportunities to reply. Link to the actual page    https://www.mr-electric.co.uk/become-a-franchisee/

Join an Experienced Electrical Business

Have you ever considered starting your own business but didn’t know how? Perhaps you already own an electrical business and want to explore how franchising could take your operation to the next level. Whatever your goals, Mr. Electric provides a proven business model backed by unrivaled franchise support.

Proven business model in 2008 they had approx 50 franchisees since then approx another 30 have joined. There are now 5.  I would say for that statement to be accurate it should read a proven to fail business model. I did send this advert to the British Franchise Association months ago but no action was taken.

You don’t need to be an electrician to start a Mr. Electric franchise. Our business owners are leaders, managing valued employees, and building essential business relationships. Our proven systems and dedicated support provides a base for you to take control of your business and achieve our target annual turnover of over £1 million.

Target annual turnover of £1,000,000 I was the only franchisee to achieve that. The total turnover of all remaining franchisees would not amount to a £1,000,000

Whether you are a qualified electrician or a forward-thinking investor, partnering with Mr. Electric is a smart decision that stands to benefit your business.

An investor would need to take on a QS who is a higher grade electrician who would have had to pass a higher level of exam than a normal electrician. This is needed to sign off work for building control. As there is no work coming in from any source part from the investor's efforts this highly qualified electrician soon moves on. This leaves the investor paying minimum fees with no electrician till he finds another QS. This cycle goes on and has not worked. Common sense says that if you are investing there must be something to invest in. Mr. Electric has nothing 

Benefit from a National Brand

Your franchise package includes all the tools that you need to build a successful business in the service industry. Advice and assistance is always available – we provide ongoing operational, business management, finance, technical, product, sales and marketing training as required. 

They give advice and assistance failure rates will tell you the quality of that. All the tools to build a successful business then why are there only 5 franchisees left. They have no one at head office who knows anything about electrics or was ever an electrician, 

Joining a national brand brings you opportunities that would have previously been out of reach. The electric vehicle (EV) market has opened a lucrative new business opportunity for Mr. Electric’s franchisees. Mr. Electric is a government-approved installer of EV charging points and is playing a key part in shaping the EV revolution by being able to install and manage EV charging points for homes, workplaces, and public areas throughout the UK. EVs’ popularity has jumped, with customers and businesses looking for ways to reduce rising fuel bills. Over 500 new electric vehicle charging units are installed across the UK every month.

There are 5 of them a national brand stretching the imagination that one. Playing a key role in shaping the EV market. Their key role is a page on their website and 1 of their 5 franchisees fitting the odd car charger. Any electrician can install chargers and after a morning's course apply to become registered to supply the installation grants. 

In addition to this, we hold a number of major corporate accounts, companies who request work to be done by our franchisees through our in-house National Accounts team – at no extra cost to our franchise partners.

The truth is that if you started you would get zero national account work. There are one or two companies that pass very little work to Mr. Electric national accounts but they will obviously have your area covered by another contractor and will not stop passing him work and give it to you. 

Our Network

When you join Mr. Electric, you’re not only joining an established brand, but also an ever-growing network of service professionals. Our franchise network is based on a system developed by the Dwyer Group, a worldwide franchise organisation operating seven franchise concepts across more than 1,500 locations in 30 countries.

The holding company are buying up a lot of franchise companies and the group is growing by acquisition. That could and should be a major benefit but it's not at the moment. 

We plan to aggressively expand our UK network of electrical service professionals over the coming years. Our objective is to be the number one domestic and commercial electrical contracting organisation in the UK.

They might plan to expand but with nothing to offer, they will fail. I believe though it could work but not with the current management. Electrical Contracting Mr. Electric only pushes domestic and light commercial work not contracting. This post has been up for over a year and no one else has joined. The advert has been up for longer and numbers of franchisees have dropped 

To learn more about franchise opportunities with Mr. Electric, visit our dedicated franchise website today.

To learn more about Mr. Electric call the 5 current franchisees or me on Jeff Longley 07899941055

This is just one case there are plenty more I've heard of both inside and outside of my ex franchise. I have sent this to my local politicians looking to gain a bit of support for a debate on regulation within the house.

I've had people get in touch who have been encouraged to borrow on credit cards to join a franchise. Another one was sent a 110-page contract over next day someone from the franchise visited saying things like the offer of a franchise can be taken away head office don't like people who can't make a decision and getting him to sign there with a random person who was doing some plastering in his house that he did not know to witness the signature. He is at the moment suing for miss-selling.

Another young girl aged 23 with a new baby left the army borrowed money on her house to join the franchise and within weeks had run out of cash. She tried to get out and asked for her money back. Franchise lawyers soon stopped that with threatening letters and she ended up borrowing more to leave and signing an NDA. The list goes on a franchise is not a contract signed by equals it is a contract made up by companies with top advisors and signed by someone who most probably has never signed a contract. 

One franchisee who was a one-man band could not work as his son was shielding due to Covid. The franchisor refused to give him a break in minimum fees even though his son was shielding. This is despite the fact that they themselves furloughed the vast majority of their staff.

I have seen totally false cash flow projections sent out to people a franchisor can do or say what they want if the only redress a franchisee has is through the courts. The British Franchise Association is as much good to a franchisee as a chocolate teapot. 

The list goes on and on and without regulation will just grow 

I have just heard from another Mr Electric franchisee who wanted to leave and despite his false cash flow projections broken promises he was frightened to take the expensive solicitors on. Before joining he was told not to call me as I was a miserable negative old sod. The truth was though I had picked them up on their cash flow projections false advertising etc. After a couple of years of trading, he wanted to leave and could have easily sued them but he was so frightened of their threats that he used all his savings to pay a smaller penalty and signed a gagging order to get out. A young man with a young family another life ruined by these people. They are just bullies who get away with what they want because they can. 

Total miss use of gagging orders 

Compare that British Advert with the American version where there is regulation. No outrageous comments about turnover a million, being leaders in the field of car charger Installation. In fact no unsubstantiated comments at all  

https://franchise.mrelectric.com/?utm_campaign=Consumer%20Site%20Referrals&utm_source=mrelectric.com%20referral&utm_medium=cta&utm_content=header

1.      The BFA’s Code of Advertising Practice shall be based on that established by the Advertising Standards Association and shall be modified in accordance with alterations notified by the ASA.

The BFA will subscribe fully to the ASA Code unless, on some specific issues, it is resolved by a full meeting of the Council of the BFA that the ASA is acting against the best interests of the public and of franchising business in general on that specific issue; in this case the BFA will be required formally to notify the ASA, setting out the grounds for disagreement.

2.      No member shall sell, offer for sale, or distribute any product or render any service, promote the sale or distribution thereof, under any representation or condition (including the use of the name of a ‘celebrity’), which has the tendency, capacity, or effect of misleading or deceiving purchasers or prospective purchasers.

3.      No member shall imitate the trade mark, trade name, corporate identity, slogan, or other mark or identification of another franchisor in any manner or form that would have the tendency or capacity to mislead or deceive.

4.      Full and accurate written disclosure of all information material to the franchise agreement shall be given to prospective franchisees within a reasonable time prior to the execution of any binding document.

5.      The franchise agreement shall set forth clearly the respective obligations and responsibilities of parties and all other terms of the relationship, and be free from ambiguity.

6.      The franchise agreement, and all matters basic and material to the arrangement and relationship thereby created, shall be in writing and executed copies thereof given to the franchisee.

7.      A franchisor shall recruit only franchisees who, upon reasonable investigation, possess the basic skills, education, personal qualities and adequate capital to succeed. There shall be no discrimination based on race, colour, religion, national origin or sex.

8.      A franchisor shall exercise reasonable surveillance over the activities of his franchisees to the end that the contractual obligations of both parties are observed and the public interest safeguarded.

9.  Fairness shall characterise all dealings between a franchisor and its franchisees. A franchisor shall give notice to its franchise of any contractual breach and grant reasonable time to remedy default.

10. A franchisor shall make every effort to resolve complaints, grievances and disputes with its franchisees with good faith and good will through fair and reasonable direct communication and negotiation.