Franchising’s Sinister Side: Vanishing Ad Dollars

TheStreet:

On the surface, franchise expansion means it’s time to pop the champagne.

But this is often when things turn ugly for the company’s frachisees.

Franchisers love their national advertising funds. In theory, each franchisee pays about 2% of gross revenue to this national pool with the assurance that they will reap the benefits.

In a perfect world, this means equal and effective marketing for all.

In reality, you sometimes get sticky scenarios. The money might be funneled toward new franchisees rather than to those who contributed to the ad budget in the first place.

Richard Solomon has seen this repeatedly in his 45 years as a franchise attorney.

Growing Pains… read on.