The scam of the franchises

"A lot of the franchises offered online are ghosts, they really have nothing behind them. They are a model and a fictitious economic information. " This is what Jose Zamarro, Legal Adviser of the office Pérez Álvarez says. "It is simply a scam," continues the expert, who carries annually about 100 litigations between franchisees and franchisors. "There are cases of language academies where the reality is that you do not even get 10% of what you were supposed to earn," continues the lawyer, who says that his clients come to him to denounce "after to have exhausted the savings of their relatives and to have tried to endure until losing everything ". In the fairs dedicated to this class of companies, have seen ice cream shops without any local in all Spain that asked for 25,000 euros, for example.
In Spain there are 1,298 franchises (10 years ago, there were only 850). Among them, many well-known fashion firms, supermarkets or catering companies. But also a lot of very unknown businesses. "They present a good project on the Internet or at industry fairs, they say they want to expand it and that you are going to be the first to put it into practice in your city, which is a great opportunity, and the illusion of people surpasses the reluctance and the fears, "explains Zamarro. Sometimes they are dental clinics, or academies, or bars with a spectacular design and no real base behind. The global business of franchising billed 26,482 million in 2016.
In France, the franchisor is obliged to have three own businesses opened in three different cities for two years
However, the spokesman of the Spanish Franchisors Association, Juan Carlos Martín, denies that such scams exist within their association. "The European code of ethics obliges you to have at least one physical place that has worked," he says. Although outside of its association does concede that there have been businesses that can be described as 'ghost' and points especially to "all those stores that came from electronic cigarettes and to laundries like La Colada Express." For Martin, those models that "do not offer support or maintenance can not be considered franchises and therefore we do not admit them in our association." There have also been cases of real estate consultants and other internet-oriented businesses that have tried to enter the world of franchising "without having the slightest logic."
The Spanish law does not specify anything about these businesses, whose contracts are regulated by the Civil Code, like any other commitment signed. At the time, it was tried to include some specific articles to regulate it, "but it was not done in the end because it did not interest the 'lobbies', according to Zamarro's assessment, which claims that at least rules like the one known in France as 3x2. This requires the franchisor to have three businesses open in three different cities for two years before being able to subcontract to others.
Scams
In Spain, anyone can franchise. Just pay, and "that's how they fool people". A circumstance that, according to those affected, invites abuse and sometimes "directly scams because they do not include business plans or anything at all." "All these inventions that are not such are totally a ruin," concludes Zamarro.
From the AEF they recognize that sometimes "leonine contracts" are given, but that for that circumstance they always recommend "to take the documents before signing them to a specialist so that it values ​​them and if it is very abusive they do not sign it". "These contracts are for adhesion, they are already made and they throw out a lot of obligations and no rights," says Zamarro.
It is not calculated on the real benefits, but on the money that is entered without taking into account the expenses
Complaints about these abusive conditions are almost all based on a common basis: it is impossible to pay what is required. The case of more than 100 associated DIA supermarkets in Asafras reported that, in their circumstances, they were forced to sell at a loss, and that with annual sales of around two million euros they lost money. Since DIA claim that they are a minority who lament and that the bulk of their franchisees are very satisfied. Some of the Asafras associates lost their premises.
More often than not, according to Zamarro's experience, a percentage of profits is paid. And therein lies the trick, because it is not calculated on the real benefits, but on the money that is entered without taking into consideration the expenses. Costs that are often caused by the policy of the franchise: "You can not make money in a bar giving beer to less than one euro." The promotions are supported by the franchisees.