In most cases landlords require a bond worth 3 mths rent which is held by a bank.
In some causes, franchisee use the equity and security of there home to fund the purchase of the franchise including the rental bond.
And yes, many franchisees just walk out because they have nothing left to loose. Or they say come and get me. I have little money left. And that's when franchisor needs to make a decision if it's worth going after them legally. In most causes it's not worth it and the franchisor just takes over the shop including equipment. Run it as a corporate store then sell it as a going concern to another sucker, sorry new franchisee. And the cycle goes on. Without the lease the franchisor can't partake in this lucrative practice.
This has worked a dream for franchisors for many many years. And is a huge source of profit. But, the senate enquire into the franchise industry wants to stop this and many more things that make it so easy for the franchisor to rip off the franchisee.
Problem for RFG is there reputation and that of the franchise industry is stuffed. So finding new suckers sorry franchisees is very very hard. So RFG has to deal with these lease exposures so how.
RFG Price at posting:
18.0¢ Sentiment: Sell Disclosure: Not Held
