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Joined: Jun 2015
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colrey Offline OP
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Thank you so much to all who have posted so far, some very insightful comments!

@renosteinke

In relation to the legal case I offered a link to, I was simply offering evidence of the potential implications of signing a franchise agreement and the negatives from a franchisee perspective.

In summary this case related to a franchisee who operated outside of his territory after a new franchise was sold in that area. Granted, you are not supposed to do that as part of the contract but if you read the link, it is more complex than that and highlights the franchise relationship.

The key points are as follows:

1. It shows how messy things can get between the 2 parties, the franchisor and franchise.
2. The franchisor logs conversations with franchisees. This is good but can be used to challenge the franchisee on their conduct and therefore applicable for use in court cases. They failed to detail phone calls asking the franchisee to stop advertising so I wouldn’t be very happy if I was the franchisee they were encroaching on.
3. 3 years of legal wrangling over this issue seems like a headache to me and the franchise had to keep working under the brand all through this time. Sounds ugly to me.
4. Imagine how you would feel if you spent $30k only to find out that another franchise was operating in your area, advertising and taking your customers? You would go crazy! The said franchisee would have to sit it out and wait while the franchisor legally challenges the other franchisee. A 3 year time period, all of which would not have occurred if I didn’t have a franchise.

Of course there are legal disputes in various parts of life, including franchising. I don’t see your point here? By highlighting the above case, I am simply saying, why would you increase your risk by becoming a franchisee? A franchise agreement clearly controls you but in the above case not one but 2 franchisees are controlled. One franchisee, the one who started in the area where advertising was taking place would have suffered tremendously and would not have factored this issue into the equation when buying the franchise. So this franchise was under the control of the franchisor for 3 years while they dealt with the legal challenges associated with the other franchisee. All of this adds up to excessive control over the new franchisee who did not deserve so many issues when trying to build their business.

In short, if franchising gets this complex, why not minimise the risk by setting up your own business. You may have other legal implications to manage as part of the business (unpaid invoices and the like) but you would have these as a franchise or not.

“Colrey, it appears that you do not understand the difference between a franchise agreement, and simply being an employee based out of the local branch office.”

I find this a little offensive, of course I know there is a difference between the two. A franchise agreement offers me the right to trade under a specific brand name and their said systems to operate my own business trading as the said franchise in a particular area. Of course this comes with certain rules but I have some degree of freedom to grow the business how I like with their support systems and structure.

Having said that, it has come to my attention following research that a franchise may inflict too may rules on the business owner, thus making it similar in many ways to an employment contract. Take McDonalds for example, I understand their franchisees are told who to buy from, how to cook the fries, employment practices and so on.
Your decision to buy a franchise comes down to your personal tolerance for rules. To what extent do you want to be told what to do when running your business?
So, I know the difference between employment and franchising, I’m just highlighting the decision making process and the balancing act you have to consider when choosing to franchise or not.

@twh
Fair point regarding working with other electricians and the freedom this may bring to buying a franchise. However as @renosteinke points out the franchise agreement is very much like this anyway. You are buying into a group of other companies throughout the country. They have the systems, procedures and websites built so you buy in and go for it. However, with this approach you lose the control you may gain by getting a group of independents to work together.

Logistically though, you would need an organisation to manage all those electricians and do the various tasks for them. How would you agree on things, who makes the decisions and what cut would the company who organises this make? Ultimately this type of structure would come back to a franchise system of sorts. Perhaps what you are really saying is one where there is more freedom and I do see the opportunity in that.

As regards the comment made by @renosteinke and reinventing the wheel, perhaps we are just discussing the alternatives and more efficient ways of delivering service and systems without the fees of Mr Electric. After doing my research Mr Electric has been in operation since 1994, so why are they not nationwide, like McDonald’s? Surely in that timeframe, they would have sufficiently promoted the business to every state and city and subsequently proven their operations and covered the country?

@renosteinke
Regarding your comment about McDonald’s being a known quantity and you would choose them over "Joe's Diner", I would say you are right in most cases. We go to Mcdonalds because we know what we will get, however with Mr Electric I think you need to think a little differently. You go to McDonald’s because you know exactly what the burger and fries will taste like, my reservation is whether you will use Mr Electric because they will fit lights perfectly in a kitchen? McDonald’s offers something others can’t replicate easily, even Burger King have different burgers so they do different things as well.

Mr Electric might have good service but the difference with McDonald’s is that the independent electrical business owner may find it easier to replicate their way of doing business. In this way the business owner avoids the initial franchise fee and ongoing fees and is more than capable of competing with Mr Electric on price, service and more.

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Joined: Apr 2002
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Reno:

Basically, IMHO you do not need any franchise involvement to operate a business. You could have 'wrapped vehicles', have your staff wear white long sleeve shirts, blue work pants, and even a tie!!

An area HVAC/Plumb/Elec contractor does it. Has a large staff/operation and gets top dollar for services rendered.



John
Joined: Jan 2005
Posts: 5,316
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No doubt, John. I never suggested otherwise.

But ....

Once you talk about associating your business with others in other locations ... well, that's pretty much the dictionary definition of "franchise."

A point not clear, it seems, to some.

Joined: Jun 2015
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colrey Offline OP
New Member
After doing some more research I found some other legal cases that are worth considering.

Trademark Infringement

https://docs.justia.com/cases/federal/district-courts/california/caedce/2:2007cv00618/161306/13

This shows a trademark infringement and most likely involves a franchisee who is still using the branding, phone numbers and the like after ceasing to formally use the brand to trade under. In these instances the franchisor will demand that phone numbers and other communications are transferred to them, so they can pass them to a new franchisee. So if you fall out with the franchisor, they are well within their rights to ask you for this information. In short you may have built the business ok, got some customers and then you decide to leave but you must give them the phone numbers back.

Fairly obvious stuff within a contract I guess but we are no legal experts and we need to know what may come our way if things don't work.


Use of Logo & Copy Cat Marketing

This one shows what happens when you misuse the franchise branding.

http://www.gpo.gov/fdsys/pkg/USCOURTS-ksd-2_06-cv-02414/pdf/USCOURTS-ksd-2_06-cv-02414-11.pdf

This franchisee setup a website without permission from the franchisor, they used parts of the Mr Electric logo to form their new company logo (following termination from Mr Electric )and used this in marketing for that new company. The franchisee subsequently continued to turn up in a Mr Electric van to do work and continued to use the telephone numbers from his defunct Mr Electric business to grow the new business. As such the Dwyer Group were within their rights to challenge this.

The point here is simple if you’re the type who thinks they can get away with naughty behaviour of this kind, think again! They clearly have the financial resource to challenge a franchisee legally and have proven they will act.

In summary, they know the law and you as an electrician may not know all the ins and outs. Furthermore, you may not have the financial means to challenge them legally if you have your own grievance against them.

Joined: Jan 2005
Posts: 5,316
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Not to be thick, but ..... WHAT is the point of this thread?

Do we seek information about Mr. Electric? Is it simply an excuse to slur the operation? Is there a specific complaint to offer?

On the general topic of franchises, this site has numerous threads about certain other operations that clearly abuse their "members." Some appear to be little more than scams. Mr. Electric is clearly not in this category.

If the OP is trying to erect a soapbox from which to slam all "corporations," let him do it in Piccadilly Circus. I take offense at the assumption that the individual contractor is an angel and the parent organization the culprit. I would hope the parent company knew what it was doing, and had the resources to uphold their part of the deal.

Running a business is a trade, like any other. It takes time to learn, and you need a mentor. Franchise operations are one route to getting the guidance you need. If business profit is represented by a dollar bill, that bill has on it the motto of the franchise: E Pluribus Unum (Out of many, One).

Joined: Apr 2002
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reno:

Going back to the opening of this thread, my point was to say that franchise has advantages and pitfalls.

Various comments within this thread seem to support both.

My comments were not intended to 'slur' or badmouth Mr E.

A visit to the linked website (Mr E) lists all the other operations that are part of the parent co.



John
Joined: Mar 2004
Posts: 947
T
twh Offline
Member
Is giving up self-determination to be part of a franchise is worthwhile?

In my opinion, if you do residential work, it might be worthwhile because the product is similar. For example, cleanliness and punctuality are good in every country. Customers will pay more for those things and will respond to that in advertising because they don't know an electrician. Paying to be part of that brand could be beneficial.

If you work in a barn, they don't care if you dress neatly or put booties over your work boots, and everyone stinks.

If you provide emergency service to industry, they will understand that you won't always be there at the appointed time because you might be somewhere else. What they want is for you to drop other work when their production line is broken.

In my case, I quit residential work because I can't be clean and punctual. I can only make an 8:00 appointment and I can never still be clean at the end of the day. When I gain a new customer, it's because the last electrician (or more) couldn't fix the problem or didn't like getting manure on his hands. How would you franchise this?

Joined: Jun 2015
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colrey Offline OP
New Member
@renosteinke

“What is the point of this thread?” I’m afraid you are probably not wired like me unfortunately and not especially compassionate, so I’ll explain.

When I consider a business decision, some are easy, others are more in depth. This one being the later. So it is of crucial importance that both opinion and fact are discussed on such subjects to support not just me but anyone considering this franchise or others. If you care about other people, you care about this thread. It’s helped me understand the opinion of others and to debate the concerns and the advantages.

If anyone has this thread at their disposal now, they can choose to use it however they like but the discussion, facts and opinion are very useful. It’s about details, links around the internet and more, not fluffy conjecture or broad statements about franchising.

By being a digger like me, you will find out information, analyse it and present it for others to comprehend. My initial thoughts were very positive on this franchise but after I got into full on digging mode, I found out that it is it not for me. This information and analysis is probably very good for someone who is not very analytical, who needs to fully understand the implications of their actions. Some people, while intelligent and thoroughly decent are not good at that so this thread offers such guidance.

In short, I care about whether someone could lose their house due to a bad business decision so this thread and others like it go some way to offering transparency where it is certainly required.

Mr Electric may not fall into the category of a scam, their branding is good, website not too bad and I’ve heard some other decent things but my research across multiple forums and other locations online has led me to think otherwise. They should be nationwide after being in business for 20 years but they are not and their systems to do not sufficiently mirror the strategy of other successful franchises (references online confirm this opinion). Similarly, the reviews on Glassdoor for the employees of the Dwyer Group are far from positive!

I reiterate the point for sharing the legal cases. WE ARE NOT LEGALLY AWARE, THEY ARE! Clearly and I say clearly again, if you have read the legal cases, they show how all sorts of avenues to distress could occur. This risk is not acceptable for me!

“If the OP is trying to erect a soapbox from which to slam all corporations,"

No, this is not the case at all, many corporations do a great job and provide wonderful services to us all. Many in the trade are no angels, you’re correct but to describe this as a soapbox is churlish. Information and transparency is essential and it is everywhere now. As such the corporation and the small business owner must respond with similar morality to such open dialogue. To be offended at assumptions is fair but there are no assumptions to be made if you have read the legal cases or bothered to do the research I have done. Evidence everywhere and simple conclusions to be made on the basis of fact.

This thread and others like it can be used to help people, simple as that!

Joined: Apr 2002
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Interestingly, last evening while looking for something to watch on TV.....channel surfing....

Undercover Boss! Well it's the lady that 'owns' the parent company (Dwyer) of which Mr E is a part.

The Mr E guy she took a 'ride' and tryout for an electrician job had an interesting view of some of the 'rules' that he signed on for. Booties, truck wrapped or signed, etc. that he told her (not knowing who he was talking to) he did not think were important.

colrey:

As you spend time here, you will get to know renos demeanor.




John
Joined: Jun 2015
Posts: 6
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colrey Offline OP
New Member
@ HotLine1 yes I think I will, it seems he likes to win arguments on things but this forum and others is for helping people, simple as that!

I need to watch that Undercover Boss, should be a little enlightening.

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