16 December, 2010

Taking up Franchise Offerings of Education Industry...Be Warned (Caveat Emptor - Buyers Beware)

If you are planning to take up Franchise Offerings of Education Industry, be warned about the further repercussions.

Franchising word has become synonymous to 'smart cheating', by carefully utilizing the business & legal tools available.

Informations mentioned further, would specially benefit you, if you are planning to take up Franchise of any of the below mentioned businesses of Education Industry:

1. VSAT based Education Center
2. Preschool
3. School
4. IT Education (all types)
5. Finance, Retail, Spoken English Institute

( Note: Investors are referred as Franchisee and Company/Individual coming up with business/Franchise offerings are called as Franchiser.)

Investors shall specially be careful about taking Franchise Offerings from some most popular names and big companies (in terms of revenue and net worth) of Education Industry.

Important Points to understand:

1. Business proposals and offerings are poorly made.

2. Franchiser don't have any good business model, or good technique, which shall be available for replication.

3. Only oral promises are made by franchiser,and written agreements are made in such a way to favour only the franchiser.

4. In cases of Franchiser conducting programs/classes (VSAT or technology based education) many of the programs are not even launched and Franchise Fee and other amounts are taken well in advance from franchisee.

5. In many of the cases, 'Fee' is collected from franchisee, even Six months or One year prior to starting up the business.

6. Some time before, few names fared well because of the benefit of "Marketing expenses cartel" getting transferred to franchisee, and not because of "good" business model or "good" name.

7. Entire education system, is dependent on the quality of manpower / teacher, for which franchiser don't have any plan. Very little training is provided by franchiser and even the Trainer / Manager, coming from Franchiser are of very poor quality (as franchiser keeps an eye on saving on salary and not keeps an eye on quality or benefit of franchisee)

8. Service delivery to the end consumer is so poor, that along with franchiser, franchisee also starts the same "cheating" cycle started by franchiser. (Investors shall think, whether they wish to do sensible business or cheating business)

9. Agreements are made for a very short duration (3-5 years).

10. Franchiser enters into an agreement with franchisee, only with a intent of his own benefit and Franchisee are made to suffer loss at all stages.

11. Franchiser is fully aware that due to very long and tardy legal process, none of the franchisee will ever go to court. Courts also end up favouring franchiser, as franchiser has meticulously planned the entire steps, which humble franchisee lacks (most investors who are not self starters and has very humble background takes up franchise business)

12. Employee / Manager of Franchiser are kept under such control and directed in such a way, that they lie in most possible ways (most of the employees even don't understand that by working in a manner as directed by their employer, they are committing "fraud" punishable offence under IPC)

13. No support or very poor support comes from Franchiser

14. Instead of making collaborative approach, extortive approach is used by Franchiser with Franchisee

15. Franchised brands are build on the Investments made by Franchisee (investors), for which investors don't get any reward, directly or indirectly. Rather pioneer investors are always at loss as they are made guinea pig, and also face the brunt of untrained managers, overly greedy franchiser and poorly planned business proposals.

16. Royalty and Franchise Fee are generally kept so high that, investors end up earning nothing or earning losses.(because no or poor service is provided by franchiser)

17. When Franchisee's business goes under troubled phase, franchiser has the most proper way and guts to convey to franchisee that, all losses and problems are due to franchisee only. (please think if any Investor / Franchisee has all possible means to do business himself/herself, why he would have decided to take up franchise from the Franchiser/Company)

18. Investors are also very confused regarding the taste and choice of end customer and they think that by taking up franchised business, they will attract more customers and deliver good quality, which is not at all true.

19. In the name of Corporate ladder/ structure, franchisee is not allowed to meet Real promoter, before signing up the agreement.



Article is written with a intent to help and warn investors and clean up the Franchised Education Industry.

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