Worst of the Worst Franchises

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1 FranchiseBusinessREVIEWTM Sharing the franchise experience Worst of the Worst Franchises 2007 Franchisee Satisfaction Study 2007 Franchise Business Review. All Rights Reserved.

2 TM FranchiseBusinessREVIEW Sharing the franchise experience Dear Entrepreneurs, It is our mission to educate prospective franchise buyers about the very best franchise opportunities in the marketplace today. It is important to note that the companies that we promote on our websites at and are not great because we think they are great, but because their own franchisees say that they are great franchise companies. In the process of surveying franchisees from across the industry, we also come across a lot of simply and below franchise opportunities again, not because we say so, but because their franchisees are so highly dissatisfi ed with their franchise business. Unfortunately, many franchise companies fail to provide the proper training and support, marketing services, operational systems and fi nancial opportunities that they promote on their websites and in their sales materials. Franchisee satisfaction is one of the most important factors every entrepreneur should consider before investing in a franchise. While we don t name any specifi c companies, this report includes franchisee satisfaction data compiled from some of the worst companies that we have surveyed. This information serves as a great benchmark for all the things you want to AVOID in any franchise business. Despite this negative report, there are many great franchise opportunities available to you. If you are seriously considering buying a franchise, I encourage you to get as much feedback as possible from current franchise owners before making your fi nal decision. The reports and franchise information on our website can be a great resource for your franchise research. And if you have any questions, simply give us a call at We ll be happy to answer any questions you may have. Happy Franchising! Eric Stites Founder and President Franchise Business Review

3 TM FranchiseBusinessREVIEW Sharing the franchise experience TABLE OF CONTENTS SURVEY RESULTS Overall Satisfaction... 2 Training & Support... 3 Franchise System... 4 Franchisor Relationship... 5 Financial Opportunity... 6 DEMOGRAPHICS Market Information... 7 Business Lifestyle... 8 Franchisee Demographics Skills & Experience SURVEY METHODOLOGY ABOUT FRANCHISE BUSINESS REVIEW... 12

4 Summary Snapshot Rating Key For the Summary Snapshot, we calculated the score in 5 critical areas. The scores are based on our 5 point rating system: 5 - Excellent 4 - Very Good 3 - Good 2 - Average 1 - Poor Overall Summary Average score over all survey responses by section (maximum possible score is 5) Overall Satisfaction Training & Support Franchise System Franchisor Relationship Financial Opportunity Overall Satisfaction In our Overall Satisfaction section, we ask franchisees two critical questions. Of all the questions we ask franchise owners, these two questions are clearly the most telling. In the pages that follow, we cover 4 major areas that are key to franchisee satisfaction: Training & Support, Franchise System, Franchisor Relationship and Financial Opportunity. We also collect market, demographic, lifestyle and business experience information to help provide a better understanding of the overall makeup of the franchisee population. Opportunity Overall, how would you rate your franchisor and the opportunity provided by this franchise system Do It Over Again very 7% 14% 23% If you could do it all over again, knowing what you know today, would you still invest in this franchise 25% 32% yes 18% probably maybe probably not 21% 22% no 29% 2

5 Initial Training The Initial Training provided by your franchisor 12% very Opening Support The Opening Support provided by your franchisor very 27% 23% 27% 22% 24% Training & Support There are 5 key areas of training & support that are important to understand in any franchise system: initial training, opening support, ongoing training and support, field support and promotional programs. Initial Training owners rate the training programs provided by their franchisor prior to opening for business. Opening Support owners rate the programs and services provided by their franchisor during the process of opening for business. Ongoing Training and Support The Ongoing Training and Support provided by your franchisor including training/operational manuals, phone/ /intranet support, etc 6% Field Support very The Field Support provided by your franchisor very 16% 17% 24% 23% 25% Advertising, Marketing and Promotional Programs Your franchisor's Advertising, Marketing and Promotional Programs 31% 34% Ongoing Training and Support owners rate the ongoing training and support they receive from their franchisor in order to stay competitive. Field Support owners rate any field support and on-site services provided by their franchisor Advertising, Marketing and Promotional Programs owners rate the advertising, marketing and promotional programs provided by their franchisor and how effective these programs are at developing new business. very 3% 28% 49% Copyright 2007 Franchise Business Review 3

6 Franchise System Competition owners rate their franchise system s competitiveness compared to other businesses in their local marketplace. Products and/or Services owners rate the overall quality of the products and/or services provided by their franchisor. Creativity owners rate the creativity of their franchise system and the openness of their franchisor to experiment with new ideas. Competition How does your franchise compare to the Competition in your local market (including both franchise and non-franchise businesses) very Products and/or Services 12% 22% The quality of the Products and/or Services provided by your franchisor very 25% 31% 28% 27% Franchisee Support owners rate the communication and support among their fellow franchisees. 19% Creativity The Creativity of your system... openness of your franchisor to experiment with new ideas or improvements to current products/services/operations 7% very 15% 24% 30% 25% Franchisee Support Communication and support among Fellow Franchisees 7% very 18% 25% 31% 4

7 Knowledgable/Supportive My Franchisor is Knowledgable of my business and is Supportive of all of my needs strongly agree agree neutral disagree strongly disagree Accessible and Responsive 12% 14% 23% When I have a question or a problem, senior management and support staff are easily Accessible and Responsive strongly agree agree neutral disagree strongly disagree System-Wide Communication 9% 15% 16% System-Wide Communication between corporate staff and franchisees is Honesty/Ethics strongly agree agree neutral disagree strongly disagree 8% 18% 28% 32% 24% 23% My Franchisor encourages Honesty and a high standard of business Ethics throughout the organization strongly agree 33% 27% Franchisor Relationship Knowledgable/Supportive owners rate their franchisor on its overall knowledge of the franchisees business and ongoing support needs. Accessible and Responsive owners rate their franchisor s accessibility and responsiveness to any of their questions and/or problems. System-Wide Communication owners rate the overall communication between the corporate staff and franchise owners. Honesty/Ethics owners rate their franchisor s corporate culture and the promotion of honest and ethical business practices. Respect owners rate their overall relationship with their franchisor and their level of respect for the franchise organization. agree neutral 31% 33% disagree 5% strongly disagree Respect Overall, my relationship with my franchisor is and I have a high level of Respect for the entire organization strongly agree 14% agree 21% neutral 38% disagree strongly disagree 14% Copyright 2007 Franchise Business Review 5

8 Financial Opportunity Fees owners rate the fairness of the fees they pay, given the value of services and support they receive. Total Investment owners rate the total investment they have made in their business and whether it was in line with their expectations. Financial Picture owners rate the current financial picture of their franchise business relative to their expectations. Long-Term Growth owners rate the long-term growth opportunity provided by their franchise business. Fees The Fees I pay to my franchisor are fair strongly agree agree neutral disagree strongly disagree Total Investment strongly agree agree neutral disagree strongly disagree 5% 5% 21% 24% The Total Investment into my business, including both time and money, has been consistent with my expectations and any information provided to me by my franchisor 22% 30% 26% 27% Financial Picture Today, the overall Financial Picture of my business could best be described as follows tracking to exceed expectations 6% tracking to meet expectations tracking slightly below expectations 29% 29% tracking significantly below expectations 36% Long-Term Growth The Long-Term Growth opportunity for my business is very strong strong 26% moderate 34% weak 18% very weak 12% 6

9 Currently Own How many units/territories do you Currently Own % 3 6% 4 1% 5+ 4% 72% Market Information On the following pages, we look at the makeup of the franchise owners including market information, personal demographic, work/lifestyle routines, as well as job skills and prior business experience to help provide a better understanding of the overall franchisee population. Additional Units/Territories Do you plan on buying any Additional units/territories in the future yes probably maybe probably not no Geographic Location 6% 22% Please indicate the Geographic Location of your franchise(s) Northeast US Southeast US Midwest US South US Northwest US Southwest US Canada International 1% 3% 5% 12% 42% 28% 30% Currently Own Looks at the number of franchise units/territories owned by each franchise owner. Additional Units/Territories Looks at whether or not current franchise owners are planning on purchasing additional franchise units/territories in the future. Please Note: in some systems, purchasing additional franchise units or territories may not be an option, or it may not even be necessary given the business model. Geographic Location Looks at the geographical breakdown of current franchise owners. Market Size Looks at the market-size breakdown of current franchise owners. Market Size Which best describes the Market Size where you operate your franchise (Multi-unit owners please indicate the size of your smallest market location) Very Small Market (Under 50,000 population) 22% Small Market (50,000-99,999 population) 23% Medium Market (100, ,999 population) 26% Large Market (250, ,999 population) 12% Major Metro (500,000+ population) 17% Copyright 2007 Franchise Business Review 7

10 Business Lifestyle Franchising Experience Franchising Experience franchise owners by their years of experience within this franchise system. How Long have you owned your franchise(s) less than 2 years 2-5 years 6-9 years 12% 32% 39% Work Hours franchise owners by the number of hours they work during an week. 10+ years 17% Evenings franchise owners by the number of evenings they are required to work. Work Hours Average Work Hours you clock each week less than 30 hours/week hours/week 15% Weekends franchise owners by the number of weekends they are required to work hours/week hours/week 60+ hours/week 18% 27% 29% Evenings How often are you required to work Evenings almost always 25% a couple times/week 34% a couple times/month almost never Weekends How often are you required to work Weekends almost always 51% a couple times/month 31% a couple times/year 5% almost never 8

11 Flexibility How much Flexibility do you have with your work schedule very flexible 23% flexible 21% Business Lifestyle - cont. Flexibility owners rate the flexibility of their work schedule. somewhat flexible not flexible 36% Work-Life Balance owners rate the balance between their work and personal lives. Work-Life Balance Which statement best describes your Work-Life Balance very balanced balanced 35% not so balanced 28% not balanced 21% workaholic by choice 6% Copyright 2007 Franchise Business Review 9

12 Franchisee Demographics Age Group Age Group franchise owners by age range. Ethnicity franchise owners by ethnic backgrounds. Gender franchise owners by gender. Please select your Age Group % % 34% 41% Education franchise owners by education completed. Ethnicity Please select your Ethnicity African American 5% Asian Caucasian 73% Hispanic Native American Other 1% 1% 7% Gender Please select your Gender male 78% female 22% Education Please select your highest level of Education completed did not graduate high school 1% high school graduate 19% associate degree 14% bachelor degree 42% masters degree 19% doctorate degree 4% 10

13 Experience Business Experience you had before buying your franchise Specific Experience Industry-Specific Experience you had before buying your franchise Job Position Less than 2 years 2-4 years 5-9 years years 15+ years Less than 2 years 2-4 years 5-9 years years 15+ years 6% 8% 9% 14% 18% 15% Which of the following best describes the Job Position you last held before buying your franchise No prior employment Entry level position 1% 4% 36% 53% Skills & Experience General Business Experience franchise owners by their years of general work experience before they became franchisees. Specific Industry Experience franchise owners by their years of industry specific work experience before they became franchisees. Former Job Position franchise owners by the last job position the held before they became franchisees. Top Reason You Bought franchise owners by the top reason that drove their decision to purchase a franchise business. Non-management Entry management 6% Middle management 30% Senior management 18% Chief Executive 2% Business owner 29% Retired 1% Top Reason Please indicate the Top Reason why you got involved in franchising Previously unemployed Took over family business 2% 2% Seeking more control Seeking more flexibility 9% Seeking financial independence 46% Wanted to relocate 2% Other 26% Copyright 2007 Franchise Business Review 11

14 SURVEY METHODOLOGY All active franchise owners from participating companies were invited to participate in this survey process. New franchise owners that had just joined the system and had not been in business for 3 months or longer were not included in the survey process. Additionally, any franchise owners that had left the franchise system prior to the survey process were not included in this project. Franchise owners were first made aware of the survey process by their corporate office and encouraged to participate and share their honest feedback regarding their franchise experience. Franchise Business Review then contacted each franchise owner individually and supplied them with their unique login information so that they could complete the online survey. Franchise Business Review made at least three attempts to reach each franchise owner directly by and/or by telephone. The surveys were completed online. The survey itself consists of a total of 40 questions. The first 20 questions relate to the franchise owner s experience directly. The remaining 20 questions are focused on market, lifestyle and demographic questions. Each section of the survey also allows for additional text comments. Franchise owners had the option to complete the survey anonymously or choose to share their personal information. The findings in this report represent the aggregate data from 908 completed surveys of franchisees in the lowest scoring systems within the industry. ABOUT FRANCHISE BUSINESS REVIEW Franchise Business Review is a national franchise market research firm that performs independent surveys of franchisee satisfaction and franchise buyer experiences. Franchise Business Review s services include commissioned franchise research projects leveraging proprietary survey processes and software, as well as industry-wide studies of franchisee satisfaction open to all North American franchise companies. The firm administers the Franchise 50 Awards - an annual rating of the top fifty franchise companies based on the highest level of overall franchisee satisfaction by participating companies. Franchise Business Review is headquartered in Kittery, ME and can be reached at or by visiting their company websites at or DISCLAIMER This report IS NOT intended to be an endorsement or recommendation by Franchise Business Review. The views and opinions expressed within are those of franchise owners, and DO NOT reflect the views and opinions of Franchise Business Review, its members, or staff. Our franchisee satisfaction survey reports are designed to aid prospective investors in educating themselves about franchising. This report IS NOT intended to replace the typical due diligence process that any investor should personally undergo prior to making an investment decision. 12

15 SATISFACTION IS EVERYTHING! Franchise Business Review believes that the only real way to separate the truly great franchise opportunities from all the rest is to ask franchisees what they think after all, they are the real franchise experts! So each year, we survey thousands of franchisees from leading franchise systems across North America. We deliver this research here to you in our easy-to-read reports to help give a big picture understanding of franchisee satisfaction by company and by industry sector. Copyright 2007 Franchise Business Review 13