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Five lessons for franchisees from the Kleenmaid case
Written on the 6 October 2010 by Fiona Taylor & Richard Hughes
Following on from the article on the voluntary administration process, Joint Liquidator for the Kleenmaid Group and Partner at Deloitte Richard Hughes offers five lessons for franchisees and prospective franchisees.
Lessons for Franchisees
According to Richard, franchisees would have needed expert assistance to identify Kleenmaid’s problems.
Personal guarantees are generally required by franchisors for new franchisees.
Another area where franchisees can often get caught out is retention of title arrangements.
If a system contains a large amount of company-owned stores, it could be an indicator of failure, says Richard.
Kleenmaid conducted a very large restructure approximately 18 months prior to the administrators’ appointment.
Author: Fiona Taylor & Richard Hughes