UnhappyFranchisee.com Responds to Eric Stites, Franchise Business Review’s Legal Threat
Founded by Eric Stites, Franchise Business Review claims to be the leading “market research firm” that provides accurate, objective data on franchisee satisfaction to those considering a franchise investment. When UnhappyFranchisee.Com questioned Eric Stites about a controversial endorsement, he threatened to sue the site for defamation. Here is the response to Eric Stite’s threat.
Eric Stites, CEO
Franchise Business Review, LLC
125 Brewery Lane, Suite 5
Portsmouth, NH 03801
March 28, 2017
Dear Eric Stites:
At 8:44 am yesterday, 3/27/17, you sent me an email threatening that if all reference to you and Franchise Business Review were not removed from UnhappyFranchisee.Com within 24 hours, you would sue for defamation.
I asked you to provide me with any statements or content that you and/or your attorneys believe are defamatory, and promised to address your specific objections immediately.
You did not respond.
I can find nothing that I believe to be remotely defamatory in the content that prompted your threat. In fact, that content consisted of a request for clarification regarding your controversial endorsement of the troubled MODE franchise as a “Top Franchise for 2017” based solely on franchisee satisfaction. Several of the very franchisees that you claim to have surveyed have posted the same questions on UnhappyFranchisee.Com, and have strongly challenged your representation about their satisfaction.
I must therefore inform you that I will not be meeting the terms of your sweeping demand to remove all reference to you and your brand from UnhappyFranchisee.Com.
While I certainly don’t relish the prospect of an expensive, time-consuming and protracted legal battle, I believe that the issues here are too important and significantly impact too many people’s lives for me to give in to such bullying and intimidation tactics.
If Franchise Business Review is a Legitimate “Market Research Firm,” You Should Not Be Surprised by, or Fear, Intense Scrutiny.
Franchise Business Review claims to be “the leading market research firm in the franchise industry specializing in franchisee satisfaction and performance.”
The one thing that legitimate research firms have in common is they know that their research and methodology must hold up to intense scrutiny and criticism.
Scrutiny of the legitimacy of Franchise Business Review’s representations are especially important for two reasons.
The first reason is how FBR’s “research” product is used.
As you know, many franchisors, their franchise sales staff and sales brokers use franchise rankings and awards like FBR50, the Entrepreneur Franchise 500 and others as franchise sales tools to help convince prospective franchisees to put aside their doubts and sign franchise agreements that will significantly impact their and their family’s financial future. I have been critical of magazine rankings like the Entrepreneur Franchise 500 for giving credibility to flawed and failing franchise systems, but you and Franchise Business Review, in my opinion, have taken the franchise award and paid endorsement business to a new and more dangerous level. While Entrepreneur claims its listings are ranked objectively valid, their list appears within a publication clearly driven by franchisor advertising revenue. Franchise opportunity seekers would likely add a degree of skepticism in their consideration of the importance of the Entrepreneur ranking, as it’s clear that the publication is a commercial venture deriving income from self-serving franchisors.
However, you claim that Franchise Business Review is a research firm that provides objective data and rankings that cannot be influenced by franchisor sponsorship, advertising or other payments. And you refuse to provide information actual data, scores or whether you are receiving payments from those you promote and endorse, such as the MODE franchise.
The fact that you will neither explain nor retract your endorsement of the MODE franchise opportunity as one of the Top Franchises for 2017 based on its high franchisee satisfaction despite a 50% franchise failure rate, litigation and a franchisee revolt, and the fact that you respond to basic questions with the threat of legal action, has convinced me that Franchise Business Review deserves more scrutiny and more editorial analysis, not less.
The Federal Trade Commission Intended Prospective Franchisees to Have Access to the Opinions of Current & Former Franchisees
The second reason FBR “research” deserves scrutiny is the potential effect that it may have on a prospective franchisees’ perception of opportunities he/she may be considering.
The Federal Trade Commission recognized that access to the opinions and experiences of current and former franchisees was essential for prospective franchisees to make informed investment decisions.
That’s why they require the disclosure of contact information of current and former franchisees in the Franchise Disclosure Document (FDD).
However, franchisors who perceive truth and transparency as a threat to their ability to sell franchises have hidden their failures by forcing failed and terminated franchisees to sign gag orders and remain silent about their bad experiences. Some franchisors effectively intimidate current franchisees with non-disparagement clauses and, like you, the threat of lawsuits if they dare voice their opinions and candidly share their negative experiences.
Many franchisors, I’ve observed, use franchise rankings and awards as the centerpiece of their franchisee recruitment campaigns.
Franchisors like MODE require current and former franchisees to sign contracts stating they will not criticize the company or share negative opinions with prospective franchisees and others.
Then Franchise Business Review and MODE franchise sales personnel trumpet the FBR award as proof that MODE has highly satisfied franchisees.
Both Franchise Business Review and MODE are currently refusing to share substantiation or data to support that claim… even when requested by the franchisees whose satisfaction is being represented.
That suggests at least the possibility that Franchise Business Review is not in the business of legitimate, unbiased market research, but may, at least in part, be in the business of helping franchisors create a false or exaggerated appearance of high franchisee satisfaction.
Prospective Franchise Owners Deserve Honest & Reliable Information on Which to Base Their Investment Decisions.
Eric, I am sorry if you and Michelle Rowan think that I am discourteous in my scrutiny of your public representations to prospective franchisees.
If this issue seems a bit personal for me, it’s because for the past ten years, I have heard countless heart-wrenching stories of franchise owners who suffered financial devastation, lost their homes, emptied their retirement and savings accounts because they fell for an expert sales pitch and invested their futures in franchise companies that were much more dedicated to creating the illusion of caring and success than giving franchisees the systems, tools and guidance to be successful.
The devastation of the wrong franchise decision is not simply financial. Many marriages (and families) do not survive this kind of personal and professional upheaval. Often relationships with extended family members and friends who helped provide financing for a doomed venture are irreparably damaged. In these ten years, many have confided that they were driven to depression, despair and suicidal thoughts. I wish I could say that none of them ever acted on those thoughts.
It’s for that reason that I will apologize in advance for my lack of decorum and my bad manners.
It’s for that reason that I simply cannot respond to bullying, threats, and intimidation in any way other than I have in the past.
Perhaps it’s my stubborn Irish ancestry, but when someone threatens that I must shut up or else, my inclination is to get loud.
Really, really loud.
All the best,
Sean Kelly
Publisher, UnhappyFranchisee.Com
President, Relentless, Inc.
CC Michelle Rowan, President, Franchise Business Review
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TAGS: Franchise Bullying, Franchise threats, Franchise Business Review, FBR, FBR50, Eric Stites, Michelle Rowan, Fake Franchise Awards, Fake Franchise News, MODE franchise, Ciara Stockeland, unhappy franchisee, UnhappyFranchisee.Com
I continue to await a response from FBR as to why the results of a more recent survey of MODE stores is not being disclosed? Are you sitting on unflattering information about MODE that would require you to rescind your endorsement? Would you rescind an endorsement if information presented itself that suggested an endorsement is unwarranted, even if that company paid you? Simple questions. I do not pretend to know the answers but look forward to hearing them.
I find it incredible that sites designed and developed to allegedly assist and help are far more interested in monetizing than doing good work for cherished potential Franchisees doing their due diligence. I was threatened this morning and replied as follows:
https://worldwisefranchise.com/2019/06/50-best-franchises-50-worst-franchises-by-sba-default-rates-revised/
The real issue is this. Ask me if I care.
Kim Perrotta:
Good for you breaking the franchise industry unspoken mandate to never talk about or acknowledge franchise failures or problems.
There was a dog training book years ago named “No Bad Dogs.”
I believe “No Bad Franchises” is the motto in Franchiseville.
Sean
For whatever reason, the link went 404; here it is again.
https://worldwisefranchise.com/2022/02/50-best-franchis…lt-rates-revised/
https://worldwisefranchise.com/2022/02/50-best-franchises-50-worst-franchises-by-sba-default-rates-revised/
This is annoying me now. If this one doesn’t work I’ll send it out snail mail for crying out loud.