The Maids Franchise Startup Failure
Franchises Do Not Fail
During the due diligence phase of our investigation, my wife and I independently called at least 20 franchise owners. In every single case, they were filled with enthusiasm about the business and readily commented that they would make the same commitment if they were starting again today. I guess all we met were Kool Aid Drinkers. Strangely we did not encounter failing franchises.
I do not think that failure of The Maids Of SW Houston, which was our business name, will never appear anywhere. Because we desperately needed money we "gave" the rights to Fort Bend County to an existing franchisee along with all operating equipment and supplies for $30,000. The only change that will occur in company statistics is significant growth of the existing franchise. In my opinion, If TMI had been totally forthcoming they would have made us aware of situations where franchise "go away" rather than failing. I am sure that adequate information exist in the agreement to demonstrate "good faith" with respect to informing potential buyers but it failed to make a significant impression on us. This is conjecture but I suspect there have been many other situations precisely like ours where a franchise just disappeared when in reality it failed dismally. When one looks at the configuration of the mechanism for "selling" a franchise, it is clear that the procedure significantly favors current operating franchises. In my humble opinion, this is a "sick" situation. TMI can profit from franchise failures, where the owners "sell" their territory to an existing franchisee, because existing franchises grow exponentially. In the case of the existing franchise who bought our business, they received 80 RMS customers, over 700 customers, equipment, supplies and a huge territory for $30,000. We paid almost $90,000 just for the territory. For a meager $30,000 they received the end result of 18 months of hard work and investment of half a million dollars. Did TMI lose at all because of our failure. Hardly, they never missed a royalty payment because the people who bought our operation immediately began servicing those who had been our customers. It seems to me that failure attempts are actually desirable for the corporation because of the growth potential generated.
While the franchise agreement may not be structured intentionally to encourage takeover of failed businesses by existing franchisees, it is certainly conducive to that approach. For a potential buyer to become "qualified" they must have completed Training in Omaha and that activity only occurs three or four times each year. An existing franchisees is automatically a qualified buyer.
Surely we are not the only people to ever attempt start of one of the systems with less than stellar results, but an abundance of failed or struggling franchises were impossible to locate. There is now one that existed in Richmond Texas that is no longer operating and we plan to be very sure that others considering putting all their money into an investment clearly understand that failure is a real possibility.
Summary of experience
The Saga - Detailed Account Of Franchise Startup Failure
Is Molly Maids Equivalent To The Maids?
Demands of Managing Operation
Hourly Manpower Problems
Professional Manpower Difficulties - Field Managers
Franchises Do Not Fail - They Just "Go Away"
Need Money - Find An Angel
Selling The Business
Owner QualificationsSuccess Motivation