Brand awareness. Every franchise strives to create brand awareness, becoming a household name, a known provider of quality of products and services: the standard in the industry. The goal is to build brand awareness so customers buy products and services based on the reputation of the brand. If it is offered by……It must be good!
But what if the inverse happens? What if the franchise products are deemed unlawful, deceptive, and unfair? That is want happened in the case of THE PEOPLE v. JTH TAX, INC. [“Liberty Tax”], et al.,. Liberty Tax, as part of the franchise model, advertised and offered short term loans to the franchisees’ consumers. The California Attorney General took exception to the advertising content of the Liberty Taxes’ short term loans. And, the court agreed. The court imposed $118,000 in civil penalties, ordered Liberty Tax to pay $135,886 in restitution to affected customers, and permanently enjoined certain aspects of Liberty Taxes’ practices.
Not only is this bad the pocket book, this can have reverberating negative impact across the franchise systems. The public rarely separates one bad actor from another. The system as a whole will be tarnished, cast in the same swath.
We have introduced several consumer law cautionary tales on the Gettins’ Blawg. Are you a consumer based franchise model? Tell us what you do to ensure that your service and product offering meet standards.