WSI - ExFranchisees

Wednesday, March 09, 2005

Franchisee Contract Excerpts

More info by ExWorldSites

In the contract which I and many Worldsites franchisees signed, it clearly stated
13. . (Point 5) '…the franchisor shall:' (Point 5a.) 'develop the first twenty (20) "Internet Solutions" projects for the Franchisee for which the Franchisee will pay the Management Services Fee equal to ten percent (10%) of the Gross Revenues in respect of the Products or services sold. In the event that the Franchisor develops the "Internet Solutions" project for the Franchisee's business, then the Franchisee shall pay a total Management Services Fee equal to the greater of: thirty percent (30%) of Gross Revenues of the "Internet Solutions" projects, or, such minimum Management Services Fee as specified by the franchisor from time-to-time'.

14. Now, the above is a mouthful and makes little sense but Worldsites franchisees took this to mean that their first 20 sites would be developed for 20%+ the 10% Management Services Fee. This was never mentioned again and we were soon fronted with various fixed costs from suppliers with no warning or indication that the rules had changed.

15. (Point 10.1) States that a Co-Operative Advertising Fund 'CAF' would be carried out to the Franchisor's discretion. Carried out at their discretion they did! This was meant to be paid into as a flat rate per website sold. As you'd expect of a professional organisation, one would think that a report of this CAF would be made on an annual basis (at the least). I do not know of a single franchisee who knew of any details of this CAF whatsoever outside of being asked to pay for it when they sold a website. How much money had been put into this fund - where did it go? Who knows? I'm led to think that little money was attributed to this so called fund due to very few website sales. This is obviously not a good motivator for already dejected franchisees and would be proof of what everybody was thinking anyway.
16. (Point 6.2.2) The contract also stated that franchisees will pay a minimum Management Services Fee. Why should I have to pay a minimum fee at all???




source: www.exfranchisee.com

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1. Does this mean the franchisee pays for the software, then also pays a 10% management services fee?

2. Does the second part mean you will still pay 30% of your revenue to WSI, even if you decide to go to someone from the outside of WSI for development?

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