The Franchise Mistake That Cost Me Thousands and the One Question That Would Have Saved Me
I once bought into a food franchise I was certain would turn our luck around.
The concept was fresh. Proper boxes instead of foil trays, food that genuinely tasted good, branches all over the world. We set it up in a busy shopping mall and it took off straight away. For a few weeks it was doing brilliantly.
Then the food supply was cancelled with no warning. When we asked why, we were told there was a dispute over who actually owned the brand. The week after that, a court summons landed on my desk for using a name I thought I had every right to use.
The Contract That Was Not Worth the Paper
Here is the gut punch. We had a signed franchise agreement. I thought we were protected. We were not.
The agreement was worthless because the person who sold it to us did not hold the trademark or the registration. They had signed away rights that were never theirs to sign. Our contract was with the wrong person, and the real owner of the name owed us nothing.
I had checked the food. I had checked the location. I had checked the numbers. The one thing I never checked was whether the people selling me the franchise actually owned what they were selling.
The One Question
If I could go back, I would ask one question before signing anything. Can you prove you legally own the trademark and the registration for this brand?
Not "do you have a nice brochure." Not "are the other branches doing well." Prove, in writing, that you own the thing you are licensing to me.
It sounds obvious now. It always does after it costs you thousands. But in the excitement of a new venture you are sure will work, the boring legal checks are exactly the ones people skip. The flashier the opportunity, the harder you should look at the paperwork underneath it.
Why We Were Vulnerable in the First Place
There is a deeper lesson here that took me years to see. We took on that franchise because the main business was struggling and I was looking for something to rescue it.
That is a dangerous place to make decisions from. When you are chasing a saviour, you stop scrutinising. You want it to be the answer so badly that you talk yourself out of the questions you should be asking. Desperation and due diligence do not live in the same room.
If you are reaching for a new venture to fix an old problem, slow down. The same lack of structure that hurt the first business will follow you into the second one. I learned that twice over, and I wrote about the structural mistakes that cost me everything because they all trace back to the same root.
Check Before You Commit
Every entrepreneur takes risks. I always have, and I always will. Taking risks is part of what makes you a builder rather than a spectator.
But there is a difference between a calculated risk and a blind one. A calculated risk is one where you have checked the things that can be checked, and you accept the things that cannot. A blind risk is signing your money away on trust because you were too excited or too desperate to ask.
Check who owns what. Get proof. Then decide.
The full story, including the venture that came before this one, is in Fail Your Way to Success. And if you are weighing up a big business decision and want straight advice from someone who has made the expensive mistakes already, work with me.
To your success.
Tahar
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Read the full story of my journey in my book, Fail Your Way to Success.