Franchise Horror Story - Tiffany Cianci vs Unleashed Brands
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- เผยแพร่เมื่อ 26 มิ.ย. 2024
- What can happen when a private equity firm acquires the franchise system you invested in? You might be surprised. Our guest today Tiffany Cianci owned a "The Little Gym" franchise that was ultimately acquired by Unleashed Brands.
Following the acquisition Tiffany claims most changes made by Unleashed Brands were exclusively one sided to favor the franchisor. Mandated caps on hiring spend, mandated call center and associated fees, new billing system, and significant financial penalties of $100,000 or more if a franchisee was terminated.
Upon advice from her lawyer Tiffany declined signing the new agreement and a franchisee association was created to protect the rights of franchisees. An estimated 93% of all franchisees joined the group of which Tiffany was eventually elected president. Shortly thereafter her "The Little Gym" franchise agreement was terminated and her location taken over by Unleashed Brands.
This is a classic David vs Goliath story as Tiffany and her single lawyer fight against Unleashed Brands who have retained a dozen lawyers from one of the top law firms in the country.
Unleashed Brands has been embroiled in multiple lawsuits including a recent 75 million dollar case launched by disgruntled Premier Fitness franchisees. This lawsuit also alleges RICO (racketeering) activity which could include criminal penalties.
Other brands under the Unleashed Franchise Umbrella: The Little Gym, Premier Martial Arts, Class 101 College Planning, Urban Air Adventure Parks, XP League and Snapology.
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TIFFANYS GOFUNDME PAGE TO HELP WITH LEGAL COSTS: gofund.me/cc021725
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TIMESTAMPS
0:00 - 1:10 Introduction
1:30 - 3:20 Why did you invest in "The Little Gym" Franchise?
3:24 - 5:00 Company sold to equity group / Unleashed Franchise Brands. What Happened?
5:16 - 9:38 Significant operational changes demanded by new owners Unleashed Brands
9:44 - 10:00 Previous lawsuit with another Unleashed brand - Urban Air Adventure Park
10:01 -14:00 Lawsuit and demanded changes by Unleashed Brands
14:02 -14:32 The creation of a franchisee association
14:33 -17:05 Minimum $100,000 "Liquidated damages" for The Little Gym and termination penalties
17:10 -17:42 New Mandates to cap labor fees at The Little Gyms (employee pay)
19:43 -22:05 Creation of franchisee association to fight back - and repercussions
22:10 -23:40 Franchise Terminated
23:40 -26:08 "Your termination was not retaliatory" or was it?
26:09 -27:20 4 of 6 Unleashed franchise brands have been sued? RICO charges
27:21 -30:00 Working with Government to try and change laws
30:25 -33:28 What is your ideal resolution? Costs to battle a franchisor
33:30 -36:47 What is the possible motivation for private equity to operate this way?
36:50 -END Final words
Tiffanys new independent business:
Teeter Tots - Music n Motion Frederick Maryland teeter-tots.com/
#franchisecity
Tiffanys GoFundme to help with legal costs: gofund.me/cc021725
0:00 - 1:10 Introduction
1:30 - 3:20 Why did you invest in "The Little Gym" Franchise?
3:24 - 5:00 Company sold to equity group / Unleashed Franchise Brands. What Happened?
5:16 - 9:38 Significant operational changes demanded by new owners Unleashed Brands
9:44 - 10:00 Previous lawsuit with another Unleashed brand - Urban Air Adventure Park
10:01 -14:00 Lawsuit and demanded changes by Unleashed Brands
14:02 -14:32 The creation of a franchisee association
14:33 -17:05 Minimum $100,000 "Liquidated damages" for The Little Gym and termination penalties
17:10 -17:42 New Mandates to cap labor fees at The Little Gyms (employee pay)
19:43 -22:05 Creation of franchisee association to fight back - and repercussions
22:10 -23:40 Franchise Terminated
23:40 -26:08 "Your termination was not retaliatory" or was it?
26:09 -27:20 4 of 6 Unleashed franchise brands have been sued? RICO charges
27:21 -30:00 Working with Government to try and change laws
30:25 -33:28 What is your ideal resolution? Costs to battle a franchisor
33:30 -36:47 What is the possible motivation for private equity to operate this way?
36:50 -END Final words
Tiffanys new independent business:
Teeter Tots - Music n Motion Frederick Maryland
Has she set up a GiveSendGo? Many of us prefer to avoid doing business with GoFundMe.
She may not be an attorney, but her street-wise knowledge is above reproach. My har's off to a brilliant woman.
Thanks for watching!
Sadly, this is too common with businesses in general 😔
This being a cautionary tale, I am convinced that MOST franchisors are in an adversarial relationship with their franchisees. Seems that the whole purpose for the franchisees is for the franchisors to bleed them dry, slowly.
In this story, look how the new owners, the private equity group, set out at the beginning to change the franchise agreements to the benefit of the new private equity owners. They do not care about the ongoing success of the franchise, only how much money they can extract from the franchisees on the way to liquidating all existing locations. Like a corporate raider, liquidate the business by selling off the assets, here the assets are the franchisees.
Sadly, we have seen these predatory examples all too often. Thank you for watching.
@@FranchiseCityOnline I hope Tiffany’s complaints are heard and reconciled in count or mediation soon.
Bad business practices and it amazes me how these moron's actually think that they can get away with this; especially long-term considering how quickly word gets around in today's modern electronic world. This company will end up paying out in a big way when all is said and done - good luck.
Thanks for the comment!
You're more optimistic than I am. 10 months later and it seems the private equity group will win
So in Tiffany's case, all was well until a new owner came in but there's no way to know if a franchise will ever be sold, so how do you protect yourself other than just not getting in?
Very true. It typically takes a few years before a franchise is scouted for acquisition so very early stage brands are likely safe - but can also bring extra risk due to no track record. You can also ask the franchisor but even the best intentioned franchisors will have a hard time saying no if the price is right! And to clarify, not all acquisitions are bad, some have been very good for the franchisees. In answer to your question, there is no way to be 100% certain.
I hope this all works out for you. That private equity Group is a bunch of Snakes. I hope all the misfortune they’ve brought to others may return to them tenfold.
You have already helped me as a prospective franchisee
Thank you for watching!
Yikes $100,000. Imagine running a franchise for however years... just to have all that work be for nothing because the company owner decides to terminate a contract.
Absolutely. Thx for watching.
If you haven't yet, you may check out the Unleashed/Premier Martial Arts vs Franchisees situation as well.
More videos like this please. Very interesting!
Thank you! Stay tuned 🙂
Snares were designed by Humans, to Trap 🐻Bears 🐻
Franchises(not you Robert) were designed by Bears, to Trap Humans 😁
Thanks for keeping me out of the mix 🙂
@@FranchiseCityOnline
Believe me! The day you get "Mixed Up" I'll be on da 1st Flight "Due North" to Align you 😂...juss kiddin man!
This woman is a joke!
I love how you guys add value to members of the community and the information you hand out!
I work at a company called Valuetainment and never miss the chance to recommend you guys when they ask about potentially opening a franchise.
Thanks for the support! Been a subscriber to your YT for a long time 🙂
Thank you, Ms. Cianci! As a current Premier MA zee, I know your pain!
This is really sad i feel for her i really hope she stay focused on her goals, very strong lady
Thank you for watching
Potential Franchisee Investors take note. Franchisors routinely change the operations manuals, which often supersede the franchise agreement. You are NOT typically permitted to review the operations manual or its content before signing your franchising agreement. Another typical franchisor abuse.
Does the Liquidated Damages clause also go into effect when you default by going out of business or is it only when the franchisor terminates a franchisee?
Good question! As a general rule, if you stop paying royalties for any reason, including going out of business, you are on the hook and the franchisor can legally seek liquidated damages. There are provisions in the FDD that outline reasons for termination which include defaulting on royalties. Not all franchises will pursue but some nasty ones have used that as a revenue stream! Also, just because there is no Liquidated damages clause in the agreement does not mean you could not still be liable/sued for damages.
Each state regulates their laws so enforceability could vary state to state. Some states prevailing law states the franchisor cant seek lost future royalties if they terminate the agreement.
It can get quite complex so consulting a qualified franchise attorney always a good idea 🙂
@@FranchiseCityOnline thank you!
Well done, Tiffany, very well done.