Do you want fries with that?

As with running any new business, operating a franchise is never straightforward.

You don’t have to tell that to dozens of O’Briens Irish Sandwich Bar franchisees. A number of years ago they felt, well, disenfranchised, by their parent firm, which was established by the gregarious Brody Sweeney (who ran at the last election as a Fine Gael TD in Dublin North East, but failed to get elected).

About 40 of the franchisees were irate that O’Briens intended to link rents to store turnover – paying more rent, the better their businesses performed. They were also miffed at what they perceived was a lack of brand marketing. So incensed were they, that legal action was threatened. They were ultimately placated, as Sweeney and his crew worked hard to win back their trust.

While a perception that enough money isn’t being directed towards marketing your franchise may be bad, even worse the scenario in Australia.

The Sydney Morning Herald reports that a number of franchisees with different firms are alleging that those companies have sometimes been selling franchises knowing that the businesses will probably fail due to poor locations.

“Each time the franchisee spends up to $450,000 buying what he or she believes is a viable business and ends up paying another agreed amount (usually about $50,000) to the franchisor for marketing fees,” says Kristen Le Mesurier in the SMH.

The franchisor sits back and watches the business fold, alleges Le Mesurier, then reclaims the site for a nominal price and resells it to another franchisee who inevitably fails a year or two down the track. The business failures are blamed on a lack of ability on the franchisee’s part, rather than on a poor location.

The alleged practice has finally perked up the ears of the Australian Competition and Consumer Commission, which is apparently investigating the claims, which are being firmly denied by franchisors.

Among the businesses at whom the finger is being pointed is Howards Storage World, a chain that sells everything from fridges to bookshelves, although there's no proof the company has engaged in anything untoward.

Earlier this year, it emerged that a former business development manager at Bank of Ireland Private Banking, Olive Donovan, had secured the master franchise for Howards Storage in Ireland and that eventually 25 of the stores could open on the island. Donovan reportedly spotted the chain while visiting a relative in Perth.

Steeled, no doubt, with enviable business acumen, Donovan will certainly have cut a sharp deal and will make an assured play to make sure the Howard’s Storage outlets here are in prime locations to serve householders whose homes are bursting at the seams. A few rattled Ozzie franchisees are surely unlikely to deflect her, are they?

http://smallbusiness.smh.com.au/growing/management/major-franchise-brands-accused-900007700.html