From A to Franchisee: The Podcast for Smarter Franchise Buying

The Dickey's Barbecue Franchise Fiasco

• Franchise Business Review • Season 1 • Episode 10

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In this episode, Michelle Rowan and Courtney Stillings discuss the complexities of franchising, focusing on the recent controversies surrounding Dickey's Barbecue. They explore the importance of transparency, the need for thorough research before investing in a franchise, and the critical role of support from franchisors. The conversation highlights the red flags potential franchisees should watch for, including deceptive practices and the significance of franchisee satisfaction. The hosts emphasize the value of data-driven decisions and the necessity of open communication between franchisees and franchisors to foster successful business relationships.

Read the NY Times piece on Dickey's Barbecue Franchise.

Host: Michelle Rowan, President and COO, Franchise Business Review.

Guest: Courtney Stillings, Vice President of Growth, Franchise Business Review

Takeaways

  • Franchising requires thorough research and understanding.
  • Transparency from franchisors is crucial for franchisee success.
  • Franchisee satisfaction is a key indicator of a brand's health.
  • Potential franchisees should be wary of red flags in relationships.
  • Support from the corporate team is essential for overcoming challenges.
  • Discounts should not be the sole reason for choosing a franchise.
  • Data-driven decisions can guide franchise investments.
  • Understanding the franchise disclosure document is vital.
  • Franchisees should communicate openly about their experiences.
  • The franchising community is built on relationships and trust.

Resources

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Subscribe to our newsletter
Check us out on YouTube, @FranchiseBusinessReview
Connect with us on LinkedIn


Michelle Rowan (00:53)
Welcome back to our podcast. This morning, we're doing an early morning recording and we are going to be talking about Dickey's Barbecue. Today as my guest, I have asked Courtney Stillings to join me. She is our vice president here at Franchise Business Review. Her role is really finding new franchisors to work with us, all of our new business development. She also leads our whole sales team.

She has tremendous relationships with our clients, so she's also taking care of them after the sale. And she is as passionate, if not more, than I am about franchisors doing right by their franchisees. Courtney, if you go to franchise events, you definitely know her. She's got high energy. She talks to everyone, and

That's what makes Courtney the perfect guest for today because she's tuned in to what franchisors are talking about. And we hear definitely lots of scuttlebutt out there about franchisors and franchisee frustrations before they hit the media. Outside of work, Courtney is always on some adventure. She's either traveling or she's hanging out with her golden retriever, Tuck, who also spends a lot of time with us here in the office. She's extremely competitive. We have that in common as well. And she can usually be found

watching and cheering on any New England sports team. So go ahead and message her directly if you want to fight her on that. Courtney, thanks for joining us this morning.

Courtney Stillings (02:22)
Thanks, Michelle. Good morning, everyone. And yeah, we can definitely fight with our sports teams. New England right now is breaking my heart a little bit, but that's that's another podcast channel.

Michelle Rowan (02:29)
I know, I know. That's right.

So there's always stories in the news about bad franchising. Some are more specific to something that's happening in a local market, something that's happening within a particular franchisee's business, but sometimes it does that, it rolls up and it's something bigger about the brand. Franchising is a fairly tight community, so we hear a lot of this information before it hits the newsstands.

And today we are going to discuss Dickey's barbecue and June, 2025 article that ran in the New York Times So we will share the link to that article in our show notes so that you can check out the whole thing. but I ended up posting the story on LinkedIn and we got a lot of engagement on it, a lot of reshares and, really it was talking about my post was talking about there's a lot that

can happen behind the scenes between a corporate team and franchisees that they have a lot of opportunities to step up and make things right in that relationship before it gets to the point of people going to lawyers and suing. here at Franchise Business Review, we're really passionate about helping people understand what they're getting into before they invest in a franchise. There's really great franchise opportunities out there. But we thought we would take this particular article and this story and have a fact

driven discussion of what is the risk? What is the importance of the support from a franchisor and the reputation of a franchise to help anyone that's looking about looking at franchising or looking to become a franchisee understand that level of risk or help assess how big the issue really is. So that's what we're going to do today. Courtney, do you want to start things off by just kind of giving our listeners a rundown of what that article?

tells us about what's happening within their system.

Courtney Stillings (04:22)
Yeah, yeah, absolutely. It was a great article and to Michelle's point, again, a lot of engagement here. So I think a lot of people's eyes are looking at this. And so the breakdown of this, the brief, brief down, whatever you want to call it these days, but the 37 current and former franchisees and also six former corporate staff filed complaints with the FTC, the Federal Trade Commission, that has oversight of the franchise rules and the regulations.

Right, so the allegation is that they sold franchises with misleading data, mostly financial data, looking at startup costs, where they were way above projections. Also pressure from corporate to keep failing units open, and also allegations of threats to deter criticism. Dickey's leadership team is saying that the article actually cherry picked negative cases.

to highlight in the article, but then also ignored stories of their successful franchise owners. So.

Michelle Rowan (05:18)
Okay, so wait,

let's pause there for one second. So the allegation is that misleading information was put in front of a candidate saying, this is how much money you can make. This is how long it will take for you to break even or be profitable. And we're going to tackle that. And then they were saying that there's pressure from corporate to keep failing units open. So a franchisor

Courtney Stillings (05:21)
Yeah.

Hmm.

Michelle Rowan (05:39)
If they have units that close or units that sell to someone else, it's reported in their FDD. So we've talked about the FDD in past episodes. It's the franchise disclosure document that has a list of active franchise owners, also systems that are franchisees that have left the system. And also you can see the churn. the number of units that are closing each year. So they basically are saying the franchise or pressured me to keep my unit open so it wouldn't impact them.

Courtney Stillings (05:46)
You ⁓

Mm-hmm.

Michelle Rowan (06:09)
in a public way. And then there's the, Hey, we're going to threaten you with X, whatever it is to try and keep people from telling the story outside of the system. So I think that's kind of what we're talking about today is, I mean, we're not, we're assuming we're just going to go again, fact driven data through this. So that is what is reported in the article. Okay.

Courtney Stillings (06:31)
Yeah. Yeah. And I think, mean, obviously there's a lot of different factors here and a lot of different points. So Michelle, with you, I would love to tackle some of these points and really how it impacts franchisees or candidates who are looking at it. Right. So what are some of the key points for the franchisees and for the candidates here?

Michelle Rowan (06:49)
Yeah. So I think the first key point that I want to bring up is that there's an accusation that there's deceptive selling practices here. We're also seeing that the corporate team is being defensive of the way that they presented the opportunity to people. and the support that they're offering the franchisees. So I kind of want to go into first, I'll share some of our data from Franchise Business Review. So about 40,000 franchisee responses in the last year, we asked the question.

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. So we ask that of every brand that we work with, and I'm gonna say upfront, we do not work with Dickey's So we'll just kind of start there. Their system is not included in this data. 21 % of franchise owners disagree or strongly disagree with that statement. So in a whole franchisee community,

is impacting a small percentage of franchise owners, I will say. But that first expectation that is set, that relationship is being built as you go to join the brand. When you're telling somebody something and you miss those marks, you're already off on the wrong foot by trying to oversell them on a dream. And then you don't live up to that. Your support team doesn't live up to what's promised to them.

you're going to be very frustrated as a new business owner and probably struggling if there's something that you feel like was not disclosed. So you're struggling and they've already kind of not delivered on what they promised from the get-go. So you're setting up a very contentious relationship between them. So yes, the franchisor has a responsibility to educate you on their brand and what they offer, but it is ultimately up to you researching your options to really understand

Courtney Stillings (08:26)
Mm-hmm.

Michelle Rowan (08:38)
what you're reading in that franchise disclosure document or how to get at this information. So I think we're all adults. We understand that what people tell you isn't necessarily always the truth. So how do you vet this data? The best thing is talking to franchise owners that are in the business. So really taking the time to talk to franchisees and understand talking to...

Courtney Stillings (08:52)
Yeah.

Mm-hmm.

Michelle Rowan (09:03)
top performers? How are they running their business? How much time are they spending in the business? How long did it take them to break even? Did they open as quickly as the franchisor said they would? Were they making money as soon as the franchisor said they would? And then talk to underperforming franchisees, understanding why they're struggling. Are they focused on their business? When they're failing, what is the franchise franchise or doing to step in and help support them? So I think that's the first key point is just understanding

Courtney Stillings (09:29)
Yeah.

Michelle Rowan (09:32)
Are you being sold and I'm going to, people can't visually see me, but I'm throwing up my air quotes. Are you being sold or are you being educated on what it's like to really run this business?

Courtney Stillings (09:42)
Yeah, absolutely. I'm going to second that right there. What you just said, Michelle, is are you being sold or educated? And I think that is everything right now and maybe not just in the franchising industry, but like how you are going about your day to day. You know, there's so much news out there and there's so many data points. But my my piece of this, too, and looking at that and kind of piggybacking is really the scope of the issue. Right. So you're always going to have

Michelle Rowan (09:50)
Yeah.

Courtney Stillings (10:10)
different voices coming at you. it can be overwhelming, the key points for franchisees and candidates is you need to talk to the large base, like all of the voices that you can in the system. So there is a small vocal group, right? And then versus the larger and also the largely successful franchise base. so...

You need to do your due diligence, your research, and before you invest, you need to talk to as many franchisees as possible, as many owners, and not just the successful ones, not just the louder ones either, but you need to really get down to the nitty gritty. How is the training and support for all franchisees? Again, not just the high performers. What does the ROI look like in each case? And with what you were saying too, Michelle, is,

the corporate team, but how are they stacked up to support you so you're not alone? I get it, I'm a businesswoman, I'm an entrepreneur, I love to get fired up about different things. And sometimes the goodness or the excitement kind of clouds your judgment. You're really excited to jump into something new and something that lights up your life, your fire.

but we need to make sure that you are looking at this holistically in a way that makes sense for you and different people come from different backgrounds and not everyone is an entrepreneur or has the same education. So how are you gonna be supported? And again, not just the high performers, but really getting as many details as possible to get a full picture of what you're getting into. And I think that is a huge key point that candidates need to realize. It's not just the loud.

people that you need to listen to or the high performers, but understanding even on your bad days or you know your rough days, how are you going to be supported and have that flexibility to look at things in a different way and I think that's just as important.

Michelle Rowan (12:07)
Well, I think it's a great question to ask. There's no business owner that doesn't go through challenges at some point in their journey. So how did the franchisor, the corporate team step in to help you work through it? And I think too, you know, we talk about it with franchisors is it's a very common thing that your loudest franchisees are somehow perceived to be the, I know it's not a real world, but the rightest in your system. And having that visibility into how that franchisee is performing can help franchisees in the system.

understand, am I listening to someone that has a similar experience to a lot of owners? Is this thing that they're riled up about or being loud about, is it just impacting them? Is it their perspective? Is it truth? So really helping to mitigate that by understanding is the issue impacting a lot of the franchise community or is it specific to certain owners? So I think that's great point you made. All right, I've got another one.

Courtney Stillings (13:02)
Right. Yeah.

Okay.

Michelle Rowan (13:07)
The industry backdrop of this story is around the comments were around closings. So closings of locations, costs around running a business, the cost to open a physical location and to run a business have drastically changed since COVID. There was delays in materials. There was, so that would take you longer to open. That would make those materials you need.

more expensive in a lot of cases, and then just the cost of labor. think, especially in the food industry, business owners have been impacted by a lot in the last five years. so ask those questions. How has this business changed since pre-COVID? Or also understanding, have they updated the information they provide in their franchise disclosure document based on people who have opened more recently? Are they looking at average

Courtney Stillings (13:44)
you

Michelle Rowan (14:02)
costs it takes or time it takes from a larger data sample. But I think being very specific to understand how in touch is that corporate team with the changes in the cost to run their business. so getting at that, asking that is important. The other thing is, as I mentioned in the franchise disclosure document, you can see the units that have closed. You can see the franchisees that have left the system. So look at the percentage of that. Is that a large population?

Courtney Stillings (14:19)
Mm-hmm.

Michelle Rowan (14:32)
any closure is very, sad. But there is sometimes a reason behind it. If the franchisee wasn't doing their part, if they picked a bad location. So really understanding is there a big percentage of units closing because it will hurt your brand as well. I'm sorry, it will hurt your business if you join a brand that has a lot of closures happening. ⁓ So that's where that's where I'll say that on my key points. Courtney, you got another one?

Courtney Stillings (14:51)
you

Yeah,

yeah, I do. having you talk about that more, you know, the FDD and or the closures in the the churn. And I think it's really important to and maybe I'll die on the sword. But trans transparency is king or queen. I think it is huge and it goes both ways. But I think management transparency is huge. And so that is one thing as a business owner that are. And if you get into a brand is that.

you need to understand how transparent the corporate team is with the franchisees, right? And ⁓ because you are getting into something big, it is not something small, and so you need to know the good, the bad, the ugly, and you can't be scared to ask for that, but the management team needs to be okay with giving you the good, the bad, the ugly, right? This is a marriage. This is something that you need to get into.

Michelle Rowan (15:25)
Yes. ⁓

Courtney Stillings (15:44)
So if they aren't public, if the brand isn't public, are they sharing how they're doing financially? So really looking for that and asking those questions. Do they do monthly check-ins with the franchisees? Do they share revenue and costs across the network? Do they share who, you know, this is what the top performer looks like, but also this is what a low performer looks like, right? And so you really need to ask for that and learn and educate yourself on asking that.

and really digging into those FDDs as well. But you also, that's a leader that you want to look up to is that somebody that isn't scared to be transparent. And I think that as a business leader yourself, that's something that you should always take as well. And you wanna share with your team, in your location, in your unit. So it's that trickle down effect. But I think that could just make.

the franchising world a little bit better is that people aren't scared of that transparency. And as a candidate, as a franchisee, you're not scared to ask for that. I think that's a huge highlight here.

Michelle Rowan (16:46)
Yeah.

Yeah. And the flip side, don't be scared to give that information out once you join a franchise network, because that's the power is sharing the data that's happening at your system allows you to compare your business to others that are running that same business. So I think it's also common that we hear franchise or say we didn't require them to share all their financials when they signed on, but we're trying to retroactively get them to share that information so we can share it across the network.

Courtney Stillings (16:51)
and

Michelle Rowan (17:13)
And sometimes franchisees are resistant to that idea, but it is for the benefit of your business. The idea is to understand if your profit is different, your profit percentage or your cost to run and operate the business is higher than a lot of other franchisees. It gives you an opportunity to highlight that and start digging into how do I reduce my cost or how do I increase my revenue to really tackle my bottom line. So it's for a candidate to understand how transparent it is, but also

when you become a franchise owner, be transparent. You'll get more out of it, for sure.

Courtney Stillings (17:45)
Yeah.

Yeah. And I think in anything, right, transparency, if you can't be transparent, you need to ask yourself why. if I can't be transparent, then that's an internal look or something else is going astray. But it's a good gut check.

Michelle Rowan (17:58)
Yeah.

I think we've hit on a lot of the key points, but I want to talk about just some red flags that we're reading in this story or red flags that you might see as you're looking at franchise opportunities. and I also, I'm going to pause cause I feel like every time I do one of these, feels really doomy and gloomy the way that we just kind of like scare people, but we both really love franchising and we work with hundreds of great brands that do this right.

Courtney Stillings (18:20)
Yeah! ⁓

Michelle Rowan (18:23)
but we are just trying to make sure that we are educating you. And, you know, we talk about this with franchise development people is if you're kind of trying to scare everybody you're talking to into your brand and they still want to buy it, that's a great potential franchisee for you. So if you're not, if you're talking to a franchise development team member and they're not all rosy, sunshiny, that's a great thing. They are educating you. They're not trying to oversell a dream. So.

Courtney Stillings (18:39)
Yeah.

Yeah. Yeah. We're not domm and gloom promise. Well, and you said this in the beginning, Michelle, and I think I'm going to write this on a bumper sticker by educate over the sale. Right. So educate sale. Yeah. So I think that's really important here.

Michelle Rowan (18:52)
I just wanted to pause because it felt a little doomy and gloomy. We are not.

Yeah.

And so, I mean, one of the red flags that I picked up on is that it kind of seemed that they, that the Dickey's team from the story wasn't turning anyone away. They weren't qualifying any of these people to understand, do you know how to operate a restaurant? If you're just deciding to jump into franchise, I think it's pretty important. You know, how to run an, an operate a franchise or a

a restaurant specifically before you put all of your life investment into that. So does that mean you have to have all that skill set? No, you have to hire an operating partner. You have to hire someone that has that experience. But the franchise should be turning away more people than they're bringing on. they're, if they're doing it correctly and understanding is this person the right fit for the person that needs this skill set to be successful in our brand? Are they in a location that we have said

this would do really well, the customers are there for our brand. So ask those questions. How are they vetting their franchisees? You want them to be picky if you're joining a brand because that will help protect your investment when you are in it. So it's good if they're picky and it's good if they try and talk you out of buying it, even if it seems strange to you. Any other red flags that you saw Courtney that you want to make sure we bring up?

Courtney Stillings (20:17)
Yeah.

Well, I did want to say something to you. I I love that we can offer discounts to veterans as brands. And so that was in this too. And I love that. But also, I know sometimes that gets super exciting any time there is a discount or any time we're trying to do new things to get more people included. But you still need to do your diligence on this just because they offer a discount.

Michelle Rowan (20:32)
Yes.

Yes.

Courtney Stillings (20:51)
or trying to get you in, you need to know what that means and you have to really break that down. So I think it's kind of a beige flag. I don't know if it's a red flag, a pink flag, whatever you wanna call it. Yeah, it's a great thing, but it's also like that shouldn't be the reason why you're joining a brand is just because you're getting a discount. So that kind of stuck out to me, Michelle too, and I don't know if we wanna dig into a little bit more of the veterans point of it.

Michelle Rowan (21:01)
I agree. Yeah.

Yeah, well, I

think it's great that franchise systems offer discounts to veterans. It's the least we can do to really show appreciation and support veterans that are coming back from service and trying to figure out what their next career or business is. IFA, the International Franchise Association, has a VetFran program, and you can look on their site to see who is offering those VetFran discounts. But again,

Courtney Stillings (21:20)
Absolutely. Yeah. Yeah.

Michelle Rowan (21:40)
Don't just look at the discount, the waive of the initial fee, whatever that discount is they're offering. That's typically what it is, is that they'll waive or discount that initial fee. And we have another episode where we talk about all those startup costs, but don't let that blind you to still doing your homework and looking at all the other areas. So again, great program to check out, see the franchisors that are committed to supporting those veteran owners. If you are a veteran, if you're talking to a company that has an FBR report,

They can show you if they have veterans in the system that answered the survey, they can show you how their veteran owners answered those questions. So again, it's something that you can see how this would relate to you running the business because you have this in common. And a side note, veterans typically make fantastic franchisees because they are very driven by following a system. They are highly smart in running all the operations and leading a team.

So it is something that franchisors seek out. They would love to get more veterans into their system because the idea and the structure of franchising, I'm not gonna say is like the military, but there's a lot of commonalities in how you're trained and how you run your business, your operation of what you're doing in the military.

Courtney Stillings (22:52)
Yeah, you get that playbook, I think, that they strive for.

Michelle Rowan (22:54)
Yes. ⁓ Courtney, I know that we have

in that article, there was some of the third party survey data that Dickey's did that they shared. Again, this is not FBR data, but do you want to share some of the stuff that stuck out from that?

Courtney Stillings (23:07)
absolutely. Yeah, again, we don't work with Dickies. This is not a product of FBR, but obviously we love surveys and we love feedback. what kind of stuck out is 85 % of the franchise owners said they would not purchase a franchise again. And 58 % of franchisees reported their franchises were unprofitable.

So those are huge, maybe even red flags too and going back to that, I mean, yeah, run. No, but it is, I mean, we look at our data, some of those main questions that we ask on our FBR surveys that I love coming back to is if a franchisee would recommend the brand or if they would do it all over again, right? So those are high tails or not tails, but high signs that.

Michelle Rowan (23:33)
Yeah, those are dark red flags.

Courtney Stillings (23:55)
Somebody is truly engaged and if they're gonna recommend this brand to their loved ones, to people that they hold close, that's a good sign. And then if they're not, then that's probably not a great sign, right? So if they're not making money and they're not recommending the brand or said they would not do it all over again, are things that are always sticking out to me in my brain for candidates to look at.

Michelle Rowan (24:18)
Yeah, and Courtney, just threw into our document that we're working off of our data around that if you want to read that as well and just share that how it varies.

Courtney Stillings (24:24)
Yeah, yeah,

yeah, yeah, absolutely. The data people, right? So we're always moving and grooving here with the data. But when asked if you could do it all over again, right? So knowing what you know today, so would they still invest in this franchise, knowing everything that they know? Only 17 % of franchisees in our data said probably not or no. So that's awesome. Like there's a lot of...

Michelle Rowan (24:48)
Huge difference.

Courtney Stillings (24:49)
Yeah,

Michelle Rowan (24:49)
Yeah.

Courtney Stillings (24:49)
there's a huge difference. There's a lot of franchisees out there and a lot of brands that are doing things the right way where when our franchisees are being asked, would you do this all over again? And would you invest in this same franchise? Only 17 % are saying probably not or no.

Michelle Rowan (25:07)
Yeah. And you brought up another great one on the would you recommend. So I popped into our database to get that data as well. So again, and now I have the actual number. So this is our database. So when you hear us in these podcasts and we share data from the industry standpoint, it might be different numbers. It shouldn't be too vastly different, but it's a live database. So we are looking at a 12 month history of any surveys we've done. So right now this is based on 45,000 franchisee responses.

Courtney Stillings (25:10)
Mm-hmm. Yeah. Yeah. Okay.

Michelle Rowan (25:33)
And when asked, would you recommend this franchise to others, only 17 % said no or unlikely. So again, we're kind of highlighting a bad actor according to the article in the New York Times, but the general sentiment of franchisees, or at least from the people that participate in our research, are going to recommend the franchise to others. Does it mean that everything's perfect, that they've got it all figured out? Of course not, but it's...

Courtney Stillings (25:46)
Mm-hmm.

Michelle Rowan (25:59)
It's a good opportunity to make your living and it's a good relationship between the franchisor, the corporate team and the franchisees. So I think that's important to highlight.

Courtney Stillings (26:09)
Yeah, absolutely. And I think there's a lot of brands, and like you said, quote unquote, bad actor, I think there's a lot of brands that are trying their hardest to do things the right way. as a candidate, I think you have so many resources now to keep asking those questions. Educate yourself. I would love to talk to how many people would recommend this brand. It's like Google reviews, but going deeper. So we have a long list of those franchisors that are doing it the right way too.

Michelle Rowan (26:22)
Yes. Yeah.

Yeah.

Courtney Stillings (26:36)
Makes me happy.

Michelle Rowan (26:36)
Yeah.

I mean, another red flag that was in there was the harassment of the corporate team or the lack of reaction to things that were being reported. I'm honestly not sure how you would vet this out unless there was a lawsuit or something out there about it. I guess you could ask franchisees when you're talking to them as far as have they witnessed any issues with behavior or pressure. But I'm not really sure how to get at that, but it was disappointing to hear that.

that was the perception of franchisees that there was any kind of bullying or harassment or threatening to their business. So that kind of, that was a bummer.

Courtney Stillings (27:08)
⁓

Yeah, agree. even when you were saying, like the Fran Dev saying that we are sharing this information, where do you get this information about projections? ⁓ So it's just going back to that financial and doing your due diligence.

you want people to be that transparent. Again, remember, that's the thing is, huge red flag for me is when someone's not being transparent, when you can just tell they're giving you the good things and not anything about, know, well, these are, you know, maybe our lower points or things that we're working on. But then they also have that pressure there too, to get the franchisees to buy more locations. So it's just, I don't know, you just, need to do your due diligence on that and that transparency, but.

It kind of comes back to what you were saying too, Michelle, and just not turning away those candidates, unqualified candidates, and really just pretending everything is hunky dory. So, red flags on those. ⁓

Michelle Rowan (27:54)
Yeah.

Yeah. And, and, sometimes

when you join a system, you are signing on for some kind of multi-unit deal. So you have some schedules, some timeline where you're committing to multiple stores units in a location, but that is kind of agreed upfront when there's pressure from a franchise corporate team for you to buy more territory, buy more units. That's also a red flag is that they shouldn't be pressuring you, especially if you're not being successful. I they shouldn't be pressuring you at all ever. If you, if your business is doing well,

and they want to encourage you to think about more locations, that's different than, I know a common one. Again, my dad was a franchisee of a not great franchise system. And there was a constant threat of somebody wants the territory next to you, you better snag it before they do. And I kept telling him, I'm like, I don't believe it, but he ended up buying a lot more territory to protect it. That was his perception of it at the time. I wish that I had been in this business longer when he went through that experience.

Courtney Stillings (28:48)
Hmm.

Michelle Rowan (29:01)
but you shouldn't feel like your team is pressuring you to do anything. And then let's talk about what's legal to share or what's not legal to share or do in that session or in that discovery process, that education of the brand. It is, and I think a lot of franchise development people, I'm going to say, I hope that they don't know that they're breaking the law, but they are not allowed to give you any financial projections or give you any information that is not listed in their item 19 of their franchise disclosure document.

If they are telling you this owner did this much in money, they broke even at this point and it's not in that document, they are breaking the law. So that is something that should be a red flag to you or ask them where they got that information or how they're presenting that to you. The other is called directing. And so I think this is a, when I talk to franchise owners in a system and they say, gosh, you know, they had me talk to specific people in the system. if they're gatekeeping you talking to

Courtney Stillings (29:56)
Hmm.

Michelle Rowan (29:58)
to any franchisee in your document, that is illegal. They cannot push you to talk to specific franchisees only. They can recommend you talk to specific franchisees because they have something in common with you or because they're top performers, low performers. They should want you talking to people that aren't successful in the system to understand how that person got to that place in their business. But if they're saying, here's a list of the people you can talk to and that's it.

that is illegal and that should be a red flag for you. So hopefully the development teams know that, that is, it's called directing and it is completely against the law.

Courtney Stillings (30:34)
Mm-hmm.

Michelle Rowan (30:35)
So I think that's all the red flags I think that we saw through that. Yeah.

Courtney Stillings (30:41)
Yeah, and I

think, obviously there's a lot of different ways to go about and, how do we be better and how do we do things the right way. But I know I have a few questions too for you, Michelle, to wrap up here, especially with all of your knowledge and your experience in franchising as well. What recourse does a franchisee have if their business performs poorly?

Michelle Rowan (30:51)
Yeah.

It's a great question and they don't have much recourse. You are committed to that business for 10 years in most cases, and there's usually penalties or fees if you close your business. So instead of thinking about it as recourse, of course you can sue the franchisor if you think that they did something inappropriate, but this doesn't happen overnight. You can see your business not performing way before you can.

point fingers at anybody or get into the legal side of it. Not to mention the cost mentally and financially to go into litigation is just a lot. And if you're in a failing business, to put that on top of everything else can really be taxing. So if you have a great support team or support from the corporate office, they should be flagging when you're not performing. And that's when you get to work. That's where you ask.

What do I need to do to turn this business around? What is the franchisor going to do it to step in and help? But you absolutely are responsible for operating your unit and for performing at a high level. So don't wait till you're facing litigation. Raise your hand and ask for help. If it's not something within the franchisors corporate team that they can help you find external resources, talk to other franchisees and find out how they're tackling those issues because it's on you as the business owner to turn that ship around.

Courtney Stillings (32:27)
Yeah, absolutely. And again, there is, there's always going to be risk in any business, right? So it is, you're acknowledging that we understand that. But again, raise your hand if you need that extra support. Okay, so then how can a person, how can a franchisee and owner prevent something like this from happening to them?

Michelle Rowan (32:38)
Yeah,

Yeah, great question. There, mean, there's no crystal ball. So the best thing that you can do is look at all the materials that you have before you invest. And I, I probably have said it on other episodes. We talk about this a lot with everyone. The only two things that matter the most before you invest in a franchise are franchisee satisfaction and unit profitability. If you can't get at the answer to those two questions, I would not move forward. I think that that is how you really have the best

shot at preventing something like this, this tragic of happening to your business. So that's it. All right. Yeah. So again, we're here, we're going to acknowledge there's risk in any business out there. I think that we've tried to present some FBR data that's showing you that these types of stories that we're seeing are not the majority, that they of course happen.

Courtney Stillings (33:24)
Mm-hmm. Yep. Drop the mic on that one.

Michelle Rowan (33:43)
There are bad apples, there are bad actors in franchising, but the majority of franchisers and corporate teams are out there to support you and your business. ⁓ I also want to wrap up and say, we do not publish the brands that we work with that don't score well. So on our site, you can get franchisers that have done the work and have high scores. And the reason we don't, you we've had people say, it would be great to have a worst of the worst list. We are not here to put...

brands on blast. is, you we're here to spill the tea and to help people understand what's happening in franchising, but we are not here to throw anybody under the bus. We work with franchisors and offer them that confidentiality of working with us because if we didn't, they probably wouldn't work with us. There's too much risk in saying, I'm going to ask my franchisees what they think, but you have the option to share if we're really dropping the ball. Our hope is they use this data internally.

Courtney Stillings (34:12)
you

Michelle Rowan (34:35)
They focus on the areas that the franchisees are saying they need to be better at, and eventually we'll get them onto that awards list so that we can help celebrate them and grow. So we don't share the brands that aren't doing there. And also too, if you're talking to a brand and you don't see them on the FBR site, ask them if they have an FBR report or if they have any kind of data from a third party source.

that shares the franchisee experience. That should be something that they can provide to you or just see how they respond to it. Why aren't they asking their system for feedback? Why are they just doing it internally? Why aren't they sharing it with candidates to get an understanding of what that system looks like? So I think that's it for today. Courtney, I always, of course, love talking with you. I hope you'll come back and share all the things that you know about all the tea and the people in franchising.

Courtney Stillings (35:16)
Likewise.

And when

you say T, you mean the big transparency.

Michelle Rowan (35:26)
I love that.

That's the tea. And we here at FBR have lots of resources to help you find the right franchise for you or make the decision that it's not right for you, but we're here to support you on your journey. So thanks for tuning in.

Courtney Stillings (35:39)
Yes.

Bye everyone.