Franchise Speak

Specific defaults? Where to begin…

* The franchise fee is supposed to allow for use of the logo and trademark. That we get. There is probably micromanagement of how that is used, but understandably so as the brand must be protected.

* The franchise fee is supposed to provide build out support (not the costs of build out). This mostly consists of the following response, “Why don’t you call other franchisees?” There is no substantive assistance for dealing with licensing authorities, county issues, etc. There is no business plan that you can use as a guide in setting-up initial performance metrics for your business. There are no generic P&L numbers they share which are needed to obtain business loans. They promise that a representative from YCI will come out to your facility within a month of opening to confirm that your operations are in order, but no one ever comes…or calls for that matter.

* The franchise fee is supposed to provide marketing support, but there is basically none. There is a real derth of timely, seasonal ads. They don’t even want to use their marketing resources to create custom ads for you upon request. By the way, the marketing resource appears to be one guy that they outsource too who can never seem to meet communicated deadlines. This means you have to create your own ads (at your expense) and get them approved if you have any hope to securing customers in your market. Then you just have to hope that your approval is within their stated timeframe of 2 weeks (which it is often not). They say the program is supposed to be relevant for children up to their teens, but their marketing materials all lean towards ages 3-7. There is a large portion of our target market which are left completely out of their marketing ads. All franchisees also pay a monthly national advertising fee of which there has been NO advertsing to date. Instead of marketing the brand, the only things they market are other companies products which they then enlist US to sell. There is nothing done to help promote or even define the YCA brand. Neither will they tell us how the advertising fees are being used.

* The franchise fee is supposed to provide for operational support. This is a joke. They do not conduct site visits (outside of their immediate Waco, TX area). If you contact them for help, they never return calls. They have never operated the type of franchise they are selling, so they have no idea about the types of challenges business owners face and have no idea how to make the programs successful (they had a 1 kitchen operation patterned after an initial vision of this business which has now gone out of business). What was originally sold as the staple of the program (monthly memberships) is an acknowledged failure. Those who consistently lose money each month often inquire for help about what the problems are or what needs to be changed in the program, but they do not respond - likely because they don’t have any suggestions to offer. There is no vision for the business. Nothing unique, creative, or strategic comes out of corporate.

* The franchise fee gets you access to their curriculum. And yes, that has gotten a lot better since 2 years ago, but that is mostly because it was so horrible to begin with. It is still largely recipes from the internet which anyone could pull together. More importantly, they had promised to have a test kitchen where all recipes would be tested with children before being added to curriculum. This has not happened consistently. I think out of all the recipes given each week over the past 2 years, this may have happened 2 or 3 times. This leads to errors in recipes or lesson plans that just tend to run flat in the classroom. Not the best impression on parents. The timeliness of curriculum availability is also an issue. While they have gotten better at giving us previews, actual recipes and lesson plans still seem to be last minute. To date, we still don’t have the recipes which will be used in the summer camps this year.

What are they NOT doing? They consistently make promises and never deliver.

* They promised to conduct site visits, but largely have not (again outside of TX).

* They promised to deliver a business plan, but have not. Instead they gave us a “strategic plan” which was very high level and has not had anything done with it in over 6 months. You would think there would be targeted actions and milestones where we coud plot our progress against these goals, but nothing. Like most of what they promise, it seems like they simply give lip service to what the franchisees want to hear and then hope we will all forget about it.

* They have made promises about branding-specific products and programs which have fallen way short or not been delivered at all. They encourage us to promote these products and programs to our customers as a draw to bring in business. Then, they never follow through with the actual thing promised. This makes us look VERY bad and unprofessional to our customers. I cannot be more specific here without sharing things that are confidential, but just let it be said that they consistently over-promise and under-deliver - and mostly at our expense.

* They encourage us to participate in outside cooking initiatives that violate their own corporate policies.

* They use strong-arm tactics and fear to threaten those who speak up about their lapses. They call you to tell you how “disappointed” they are in you and when that isn’t enough to shut you up, they send their attorneys after you to threaten you with losing your franchise. When you are being wooed, they appear as two sweet ladies from Texas, but the facade quickly drops when you raise issues they don’t like.

* They are not forthcoming and have fudged the truth about what is really going on within the franchise - to both prospects and franchisees. They wiggle around basic truths like how many locations have gone out of business since the new ownership has taken over. When directly asked about this recently, they pointed to the number of locations present which are waiting to open. However, they fail to mention how many of these unopened business are trying to give them back to Corporate and how several will not open based on the refusal by the franchisee in light of current conditions.

* They use unrealistic numbers in the rare financials they share with franchisees. If one location does well in a particular area one month, they use those numbers as a “standard”. They also mislead franchisees with these numbers by saying, “Well, so and so is having x amount in revenue.” Yet, they fail to take into account basic financials trends with this business such as how long the store has been open, how close neighboring YCA locations are, etc. It seems to be that many locations start off ok for the first 3-4 months, and then start going underground quickly. Also, the more YCA locations they sell around you, the more your business decreases. Corporate does not seem to have ANY understanding of what constitutes a viable territory. They simply say, “Oh here. This territory has x number in population.” But they are willfully oblivious to whether that territory is too close to existing locations and what that impact may be. Detailed financial charts were submitted to YCI from a group of franchisees showing how revenues decrease sharply over a year’s time after they began selling nearby stores. But they never responded to this information. For financials, they share the “positives” of newly opened locations (who haven’t been around long enough to experience the decline) and ignore any assessments about how nearby locations may affect businesses in existence. They have an attitude that, “If one store experienced X in sales, then there are no problems.” Sort of an ostrich with your head in the sand approach. When speaking with them, ask them for average revenue numbers and see what you get.

I hope this gives you just a little insight into the shortcomings of the YCI corporate entity, why many franchisees are so fighting mad, and why YCI is experiencing such a high rate of store closings.

By Feedback on Mar 24, 2008