Wayne Edgar is the managing partner of Trade Exchange Canada, a company that helps businesses barter for goods and services. Edgar started the business with his partner, Scott Berg, in 2002.
But that wasn’t the first iteration of the company. Prior to 2002, Edgar and Berg ran the business as part of a franchise. Edgar said that experience taught them an important lesson about choosing whom to work with.
“We learned that it doesn’t matter how good a business is or seems, if you don’t see eye to eye with the people at the top, or they have a completely different way of thinking than you do, it’s probably not going to work out long-term,” Edgar said.
While the franchise arrangement worked well at first, things soon began to unravel. Edgar said the franchisees began to question decisions being made by the franchisor.
“The franchisor started having financial problems and started going in completely different directions than all the franchisees thought were in the best interests of our clients,” Edgar said.
“After over a year or two of legal problems and battles, we decided to part ways with them and sue them and went through a whole mess of time and money.”
Looking back, Edgar said the warning signs were there. He recommends that potential franchisees speak with the senior people who will be making decisions that will affect them.
“If you meet with them and don’t really see eye to eye and feel that their business acumen or ethics or way of looking at things is very different from how you look at things, it doesn’t matter how good the business model is, eventually you will have a problem – it’s just a matter of time.”
On exercising caution: “The obvious things are looking through the financials and the franchise agreement. They’re always very large and they’re always weighted in the franchisor’s favour. [Speak] directly to franchisees who are already in business for a while, and not just ones you’re recommended to speak with. If you find that you’re not getting honest feedback from the franchisees or it’s all cookie-cutter, I would be skeptical, because everybody has a different experience.”
