Franchising's Sinister Side: Vanishing Ad Dollars

In both scenarios, franchisees fail to see a return, and suspicion sets in.

Foul Play?

"One franchisee never recognizes [misallocated funding]," says Solomon. "But when they get together, they talk." Common indicators of misallocated funds include slower-than-expected store sales, geographically unbalanced sales figures or shoddy ad programs.

Before approaching the franchiser, Solomon says, franchisees should collectively determine whether their suspicions are correct. Then the group can ask the franchiser: "Where's the marketing we're providing the funding for?"

Whatever you do, experts say, don't hope the issue just goes away.

"General Patton himself couldn't have galvanized franchisees to deal with abuses," Solomon says. Most are afraid to speak up for fear of retribution, but waiting it out never helped the franchisee, he says.

Safety in Numbers

"There's a huge temptation for [the franchiser] to use marketing money for other -- but not necessarily malicious -- business goals," says Andrew Seldon, a franchise attorney with Briggs and Morgan in Minneapolis. But when franchisees have an active role in the allocation of the marketing fund, there's little chance for misuse, he says.

The franchisee's limited role has been changing since the 1970s, when Pizza Hut and KFC realized the value of franchisee input.

The Gold's Gym franchisee association was started eight years ago because of the growing brand's need for a marketing fund.