Joel Libava
Note: I have some strong opinions about franchise failures. Especially since this particular story concerns our Military Veterans.
And please know this: the information I’m sharing here can be easily found online, as it’s in the public domain.
The second thing I need to tell you is franchising has been a huge part of my life for 23+ years. I love it. I’ve seen how owning a franchise has changed people’s lives for the better. It truly is the greatest business model ever invented. But it’s not perfect. There are good players and not so good players in my industry.
And both should be reported on.
Wait. Scratch that.
Both need to be reported on.
Franchise Failures: A Franchise ‘Opportunity’ For Veterans
JDog Junk Removal, a franchise business opportunity that targets our Veterans to become franchisees, has lost almost 300 franchisees via termination (or had territories sold to new franchisees). That sucks. And it got me thinking.
What did conversations between the company’s CEO and his team consist of when they were losing so many franchisees…in say, 2021? They had to know things were bad. Especially for the U.S. Military Veterans who had lost their livelihoods. Their franchise failures.
“Losing 63 franchisees last year isn’t good. And it definitely doesn’t look good on our FDD. What should we do?”
“Wait…I have an idea. Let’s just sell more franchises!”
Which they did.
But what they didn’t do-obviously, is address the reasons that their franchisees closed their businesses up, or had them sold to new franchisees. How do I know?
Because they lost 13 more franchisees that year, and an astounding 57 franchisees in 2022. You’ll see more details below.
Why didn’t they fix things?
Are Franchise Opportunity Reforms Just A Dream?
In 2019, Senator Cortez-Masto seemed serious about instituting some much-needed reforms in the franchise industry. They included:
- Unfair and deceptive contracts that give nearly all control to the franchise corporation.
- False information and lack of transparency in financial disclosure documents.
- Excessive fees with limited or no actual benefit.
- High prices from suppliers who provide rebates to the franchise corporations, and overpriced goods.
I’d like to propose #5.
Franchisors who lose more than 10% of their franchisees in any given year need to disclose that fact in a separate section of their FDD’s, and must provide documentation to the FTC that they’re improving the system so there are less failures.
That being said, if the esteemed Senator from Nevada is still intent on making things fairer and better for today’s aspiring franchise business owners, someone needs to make sure she sees what’s been taking place over at JDog’s franchise headquarters. Because, as I shared above…
300 Franchise Failures: Franchisees Of This Franchise Opportunity Targeting Military Veterans Have Gone Out Of Business Or Had To Sell Their Franchises!
According to Sean Kelly, who owns and operates the UnhappyFranchisee.com website, public records indicate that JDog Franchises LLC., a franchisor that targets our Military Veterans who want to get in business, has terminated more than 300 veteran-owned franchises, including 5 of the first 6 founder Jerry Flanagan sold.
In fact, “JDog Junk Removal Has a 99% Franchise Turnover Rate (3-year): The JDog 2023 Franchise Disclosure Document (FDD) issued September 30, 2022 reveals that 157 franchises exited the system prematurely in the previous three years, including 133 listed as Terminations and 24 as ownership transfers.” But it doesn’t stop there. There’s even more bad news about this veteran friendly franchise.
“JDog Carpet Cleaning reported a 200% Franchise Turnover Rate (3-year): The 2022* JDog Carpet Cleaning FDD states that the franchisor closed its only company/affiliate outlet in 2018-2019, but closed it in 2020. Of initial 18 franchise locations, 9 quickly closed (“Terminations”) indicating a 200% franchise turnover rate (FTR).”
With those extremely depressing statistics in mind, how is it possible that JDog is somehow permitted to sell franchises to veterans…or anyone, in any of our 50 states?
More bluntly, who in their right mind would buy any franchise opportunity offered by this company?
Wait. I know.
People who don’t do even the most basic franchise opportunity research.
And people who won’t hire competent franchise lawyers to go over the legal documents all franchisees are required to sign. It’s unfortunate. But it gets worse for our veterans. And for franchising.
New Franchise Firm Get’s Involved. But In The Wrong Way.
A new franchise “firm” hired by JDog is (according to this same article) allegedly threatening Hispanic and Veteran-owned business owners (franchisees) with litigation on behalf of JDog Franchises, LLC. How nice. Which begs the question:
Where are the franchise lawyers who want to do right?
I’m referring to attorneys who want to represent the hundreds of franchisees who had to go out of business?
More specifically, our United States Military Veterans who have had to close their doors!
What the hell?
Are we truly living in an upside down world?
Should franchise failures ever be okay?
Finally, I’d like to relay a personal, gentle message to ANYONE who’s about to invest a couple hundred thousand dollars of their hard-earned money into buying a franchise.
Do your research the right way! Read the FDD and hire a franchise attorney!
C’mon people!
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