August 2014

Franchisees Take 7-Eleven to Court for Alleged Discrimination

The world’s largest convenience store franchise is embroiled in a nasty lawsuit stemming from allegations of racial discrimination. On July 11, a group of California-based 7-Eleven franchisees filed a lawsuit in federal court. The group of franchisees claims that the franchise discriminates against franchisees of South Asian origins and unjustly forced a number of former store owners to terminate their franchise agreements as part of a profit-churning scheme. The franchisees claim that the company has violated their rights as franchisees and individuals under both state and federal laws.

“In one of the most tragic business stories in recent years, a foreign corporation has been allowed to transform the American Dream into an American Nightmare for countless individuals and families,” the plaintiffs state in their complaint.

The issue of “churning” is at the heart of the lawsuit. Churning can best be described as a kind of ploy in which franchisors terminate franchise agreements in order to resell locations. Churning can prove to be financially advantageous for the franchisor, allowing it to collect franchise fees each time a location is resold.

The Patel family, former 7-Eleven franchisees, said that in December 2013, they were forced to surrender their store to 7-Eleven after the company alleged that they violated the franchise agreement. However, the Patels argue that they were unfairly pressured to sign over their shop. They contend that 7-Eleven used highly aggressive interrogation techniques and threatened lawsuits. The plaintiffs of the suit argue that churning is disproportionately affecting franchisees of certain ethnicities, such as the Patels.

In addition to the question of churning, the plaintiffs also argue that 7-Eleven overstepped its bounds as a franchisor, arguing that the company violated franchisees’ privacy. The plaintiffs argue that 7-Eleven stalked the employees to find reason to terminate agreements.

7-Eleven has systematically denied all allegations. In regard to the Patels, it insists that the family was guilty of coupon fraud. 7-Eleven corporate and franchisees split the profit from sales in stores. By falsely reporting items as purchased with a coupon, franchisees are able to pocket the different between the coupon price and the full price of an item. Thus, coupon fraud allows franchisees to add money to their own bank account without having to give a cut of the profit to 7-Eleven.

While 7-Eleven didn’t offer up much more specific information about the Patel case, the company insisted that it only terminates a franchise agreement after a thorough investigation has found that the franchisees have broken the franchise agreement or federal laws. The company also pointed out its high retention rate.

By all accounts, it looks like the lawsuit will be quite a battle. In order for the ruling to be in favor of the plaintiffs, the accusations of churning must hold up in court. That means that the jury must not only find that the Patels’ franchise agreement was wrongly terminated, but also that they and other franchisees have been systematically targeted by 7-Eleven as part of a wider churning effort.

 

Sources:

http://www.entrepreneur.com/article/235895

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

California Passes Franchisee Bill of Rights

Last Thursday, California’s State Assembly passed a bill that greatly expands the rights of the state’s franchisees. The bill, which passed by a vote of 41 to 27, essentially makes it substantially more difficult for franchisors to terminate franchise agreements with franchisees.

Franchise groups, such as the American Association of Franchisees and Dealers (AAFD), the Coalition of Franchise Associations (CFA), and the Asian American Hotel Owners Association (AAHOA), have hailed the bill as an instrumental step in protecting and strengthening the rights of franchisees.

“Modern franchise relationships are most always governed by one-sided ‘take it or leave it’ adhesion contracts that elicit substantial monetary investment from franchise owners, but severely limit a franchisee’s rights in the franchise relationship. For franchisees, the franchise relationship is almost always a ‘bet the farm’ transaction whereby most franchise owners place their business and financial futures on the line in reliance on the strength of a brand and a franchisor’s promise of substantial support,” the AAFD explained in a June statement. “SB-610, as amended in 2014, takes a small but important step in recognizing and protecting franchisee rights.”

Interestingly, the bill has also garnered support from labor activists, such as the Service Employees International Union (SEIU). The labor union, which recently attracted attention for financially backing fast-food strikes across the U.S., was reported to have launched the website Franchisee Fairness and released a number of radio ads supporting SB-610. The SEIU argued that the bill provides substantial benefits to both franchisors and franchisees. “With greater protections from unfair corporate practices and costs, these small businesses will have the ability to treat their workers right,” the group said on its Franchisee Fairness website.

In particular, franchise groups and labor rights activists hope that the bill will cut down on the practice of “churning,” in which franchisors terminate an agreement with an existing franchisee and sell the location to another franchisee in order to collect a new round of franchise fees. The issue of churning garnered substantial media attention in the wake of the California 7-Eleven Franchisee lawsuit, which alleged that 7-Eleven was unfairly and disproportionately “churning out” franchisees of certain ethnicities.

Still, the bill has also garnered a considerable amount of criticism. The International Franchise Association (IFA) argued that the new bill makes it substantially more difficult for franchises to protect their brand reputation, as they lose the ability to quickly terminate a franchisee when things aren’t going well. Furthermore, opponents also claim that the bill could scare potential franchisees from expanding in California and rack up litigation costs for franchisors and franchisees.

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

How Capital Factory Helped My Company Succeed

The truth is that the life of most entrepreneurs is not an easy one. For many of us, it’s a constant daily battle. No matter how well things are going it seems like problems could be just around the corner or there’s an unsurmountable pile of “code-reds” to be dealt with immediately.

That said, it takes a special person to enjoy this kind of stress and punishment.  So when it comes to starting and running a business, entrepreneurs need all the help they can get.

An ordinary person spends their life avoiding tense situations.

The entrepreneur spends their life getting into tense situations.

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When I first heard of Capital Factory from Jeff Harbach of Central Texas Angel Network, I was very intrigued. He described as sort of an incubator/accelerator thing.  But an incubator? Really? Isn’t that for kids or people that don’t know what they are doing?

After meeting Josh Baer, creator of Capital Factory (CF), I could hardly believe such an opportunity existed. It’s no joke, it’s a very serious program that just stomped my preconceptions of incubators into oblivion. Capital Factory is serious business.

What is Capital Factory? Capital Factory is NOT your ordinary incubator. It’s its own beast, in its own unique category. Capital Factory is a community of entrepreneurs, business mentors, investors and vendors dedicated to the long-term success of member startups.

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Capital Factory has its own physical space in downtown Austin.  It takes up about 23,000 sq ft of office space on the entire top floor of the prestigious Austin Omni Hotel.  It’s a bustling, buzzing place at all hours of the day.  They have even added an additional entire floor (another 23,000 sq ft) for those companies moving beyond the initial phases of starting up.

CF is not just some 3 month in-and-out deal. I’m not knocking short-term incubators, but that’s just not enough time to get anything significant done —better than nothing but as good as nothing. So when I heard Capital Factory was a 2-year program, I felt a certain dedication and commitment from their team.

I immediately applied and was fortunately accepted into the program after meeting with a few of the directors. That was about 1 year ago, and I’m certain that it has made all the difference for my business.

Here are a few examples how Capital Factory helped my company, ManagerComplete, succeed.

 

It’s Like Training With Bruce Lee. If You Want to be the Best, You Train With the Best.

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First of all, being part of Capital Factory immediately gave me access to Austin’s elite entrepreneurs; seasoned veterans that have had major exits, run major corporations, have specialized business knowledge, or have written books on the subject. You get the picture. This is access that would have been impossible for me to have before.

Just imagine.  If you have advertising or marketing questions, you book “office hours” with advertising blackbelt Yvonne Tocquigny. Office hours are short sessions when you can meet one-on-one with mentors or even bring your team along as well.

If you need business strategy advice, you talk to Gordon Daughtery, Josh Kerr, or Bernie Brenner. Got sales questions? Mikey Trafton, Alan Patty or Don Craven. Radical technology ideas? John Price. Want your user interface dialed-in, talk to the leading expert worldwide: Eric Gould Bear. Someone to show you how it’s done from start to finish – Dean Drako is the man. It’s not just for guys though. If you are a business woman there are amazing female role models like Jan Ryan, Mellie Price, and Heather Brunner to help you along the way.  You want introductions, Josh Baer – the most connected person in Austin. These are just a few examples. There’s over 50 mentors available for office hours… check them out here.

 

When the Going Gets Tough, There’s a Team to Support You!

Having seasoned people to talk to and confide in can make all the difference sometimes. There can be some dark days, and when you can share these emotions with others who have been there, it certainly helps.  A rope, if you will, to pull you up.  Plus, you have a community of other entrepreneurs dealing with similar growing pains so you can share stories, tactics, and ideas with people right down in the trenches with you.

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There is another kind of support too that commonly goes unnoticed: the operations team at Capital Factory.  The operations team at CF is so helpful when it comes to scheduling time with mentors, video productions, booking conference rooms, handling mail and deliveries, finding office space, etc. It’s like having an Admin staff but not. There’s a whole team here to help: Sarah, Lily, Jessica, Nicole, Ali, Theresa and Lauren.

 

Show Me the Vendors, Lots of Free Stuff (and not junk either).

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Then, come all the business vendor discounts and offers.  Through CF connections with Microsoft, I have received over $25K in free development tools like Visual Studio, Sql Server, Office, etc. along with $60K credit in cloud storage.  Rackspace hooked us up with 5 redundant servers for free for a full year… another $25K+ free.  Loving Rackspace!  Google offers free development kits. There’s even free office space for a year.  $50K from Amazon Web Services, the list goes on.  If you add up all the other vendor stuff, I’ve received upwards of 100K in free tools and services.

 

Capital Factory University.  Like a Mini-MBA.

Capital Factory also offers a mini-MBA program called Capital Factory University (CFU) — organized and directed by business super guru, Mikey Trafton. CFU comes in the form of night classes every 2 weeks with a featured speaker to teach you exactly what you need to know.  These classes have been extremely helpful.   2 hours of intense, detailed discussion on everything from Sales, Marketing, Finance, Cap Tables, HR, Financial Modeling, Venture Capital, Legal, etc.

 

No Bullshit Here.  The Advice You Really Need.

But that doesn’t mean it’s easy.  It’s not uncommon to be challenged or have people dislike your ideas — sometimes strongly dislike.  People that know, that can call you on any bullshit or bad ideas.  The CF mentors are here to help you.  To tell you in a blunt, lets-not-waste-any-time-here way.  How else would you want it, right?

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This is a disapproving look.

 

“Your projections are all bullshit.  Total bullshit.“

“Your company name sucks.”

“I don’t get it, it’s just lists of stuff.”

Access to Capital.  Bridging the Gap from Startup to Legitimacy.

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Best of all, there are mentors that will actually invest in your company. If you can raise $50K from mentors, CF matches that amount. Amazing, right? That gives you $100K. But it doesn’t stop there. Silverton Partners and Floodgate also match with investments $25K each. So that brings you to $150K. Which is $100K in automatic matching. That is f*cking unbelievable. Just imagine having access to that kind of money without having to waste months on full-time fund-raising.

In my case I was very fortunate to have Yvonne Tocquigny, Dean Drako, and Alan Patty come on as lead mentors.  Then Capital Factory matched $50K, then Silverton and Floodgate both came in with $25K each. Do you know how hard that would have been for me to do without CF?  Impossible.  Impossible because I don’t have the time to fund raise and run the business at the same time.  Fund-raising can be an unbelievalbe time-sucker and business distraction.

 

Events with Lots of People and Awareness.

There is always something going on at Capital Factory: Meetup groups, free lunch, CFU classes… then there are always the larger events that come through town such as SXSW that CF takes part in (see events). These larger events bring 5,000 plus people right through CF and give you the best opportunity to hone your pitch on live people. Trust me, after talking to over a 1,000 people in one night, you’ll have your elevator pitch nailed!

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Demo Day is something else that Capital Factory hosts. This is an event when over 100 serious investors come to CF to hear top companies pitch their ideas. 100. Serious. Investors. One room. Just another great opportunity provided by CF.

 

But Has Capital Factory Made a Difference?

I’ve owned businesses before, and I know first-hand that CF is a huge advantage over my previous experiences. As well, if I compare my company in CF to my company outside of CF, these aren’t even the same category. CF is not just a bunch of young kids with investors throwing money at them. I’m 45 years old with a family.

But what difference has CF really made?

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Here’s the proof:

  • My sales have doubled in 12 months.
  • Before I had no team.  No I have a professional team of 5 (3 full-time, 2 contractors).
  • We now have a professional product with a world-class user interface.
  • We now have evolved our feature-based sales scripts into thought-leadership professional sales scripts
  • We have a solid strategy for gaining our next 500, 1000, and 2000 site subscriptions.
  • We are gaining recognition on the national stage and have attended major industry expos and events.
  • We are becoming a thought leader in franchising through our marketing efforts.
  • Before I worked from home, now we have an office right downtown.

 

The Truth about Capital Factory.

Capital Factory is not for everybody. To be successful here, you have to come with an open mind, be willing to try ideas, be coachable, and be willing to commit to making your dream happen – and thick skin doesn’t hurt. This article doesn’t mean my every experience has been positive at Capital Factory.  But trust me, I’m not one to do any unnecessary ass-kissing or take time to write an article that isn’t warranted.  I want everyone to know how CF has helped me and so many others.

Some people will thumb their nose at all this and say… well, what did you have to give up?  Not very much.  I gave up about 5% for all of this Capital Factory support (2% to CF, and the remaining % to my lead mentors).  Others will say, “they only want to take your company.”  Complete horseshit.

I’ll give up 5% any day of the week for all that Capital Factory has to offer.

 

Closing Remarks.

I don’t know how long such an amazing light can burn, but the opportunity that Capital Factory presents is unprecedented. Josh Baer and Capital Factory should be recognized as business heroes for doing so much for Austin entrepreneurs. Seriously. Capital Factory has made all the difference for my company.

What Josh Baer has built with the Capital Factory is something legendary. It really is a truly amazing phenomenon and something I feel fortunate to be a part of daily.

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Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

 

Why Is Home Health Care so Hot in the Franchise World?

Franchises in general are hot. But it’s the senior care or home health care niche that is growing at an astronomical rate. There were a mere 13 home-health franchise brands in 2000. Today there are 56, and that number continues to climb. So, what’s the deal with astounding rate of growth in the senior care and home health care niche? For an in-depth explanation, take a look at the following key points:

  • Growing demand. There is no getting around it: The U.S. population is aging. The number of people older than 60 is set to triple to 2 billion by 2050, the U.N. estimates. The more the population ages, the more demand for senior care and home health care-related services, as an aging population inevitably needs a lending hand when it comes to daily assistance and medical care.
  • Lower investment. It can often cost $500,000 or more to open a fast-food franchise, a daunting figure. Home health care franchises, in comparison, are a bargain. Most home health care franchises cost $150,000 or less to start up. The investment is primarily for hiring marketing, recruiting, and training staff, as well as for purchasing office space
  • High revenue potential. Initial investment might be low, but revenue potential is high in the home health care franchise industry. Home-health franchises can drive a lot of volume, especially considering that territories are usually large. Industry research firm Home Care Pulse found that median franchise home-health revenue was nearly $2 million. And interestingly, franchise owners brought in substantially more than independent operators. Home Care Pulse found that franchises in the home health care industry had a considerable advantage over the competition. When it comes to home health care, it pays to be in a franchise!

 

Source:

http://www.forbes.com/sites/caroltice/2014/05/27/best-franchises-home-healthcare-is-hot/

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Franchising to Make the World a Cleaner, Greener Place

While you probably like your house sparkling clean, we’re guessing you don’t like it full of toxic chemicals. Believe it or not, most cleaning supplies are loaded with toxins. For example, scented household products, such as air fresheners and dish soaps, contain phthalates, shown to be endocrine disrupters, while spot removers and carpet and upholstery cleaners routinely contain perc, a neurotoxin and possible carcinogen. 2-butoxyethanol is a key ingredient in many window cleaners and multipurpose cleaners, which when inhaled can cause sore throats and at high levels can also contribute to pulmonary edema, narcosis, and severe kidney and liver damage. Other common chemicals in cleaning products include chlorine, ammonia, and sodium hydroxide, all of which are major irritants. 

EcoMaids is attempting to tackle the problem of toxicity in the cleaning industry. A national cleaning franchise, EcoMaids is different from other cleaning services. It provides high-quality cleaning services using qualified cleaning professionals, but all cleaning products, processes, and procedures are totally environmentally friendly. Everything is nontoxic and allergen free. The company was in fact inspired by a mom who just wanted to find a nontoxic way to keep her home clean.

“Realizing that there had to be a better way to clean and disinfect her home without subjecting her family to harmful toxins and chemicals, our founder went back to the drawing board to evaluate the ingredients in all those advertised ‘cleaners’ and she searched for responsible and safe alternatives,” the company explained. “What follows is EcoMaids, an environmentally responsible maid cleaning service that utilizes effective products that do not contain toxins or allergens and a cleaning system that avoids cross-contamination and ensures that your home is spotless.”

So far, it has been quite a hit with franchisees and customers alike. “When researching available business opportunities to better understand the ecofriendly market, I found EcoMaids compelling,” explained EcoMaids franchisee Lindsay Dellasega, based in Portland, Oregon. “It was important for me to start a business that offered value, not only to me and my family, but the community. I was committed to the authentic delivery of a good product that improved people’s lives and reduced our impact on the environment.”

Founded in 2008, the company began franchising in 2009 and now has locations across the country. It is actively seeking franchisees across the U.S.

 

Sources:

http://www.entrepreneur.com/article/240119

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him onTwitter for latest updates.