| Licensing, Technology Transfers, |
[Scene opens in lawyer's office. Lawyer is balancing his check book when the telephone rings.]
Hello.
Oh, hi there, Jeff, are we still on for golf on Saturday?
Good. Sure, I always have a minute for a guy with a 24 handicap.
One of your franchisees in California just called with a problem.
Huh? What is the problem?
There are several of them, huh. OK, tell me all about it ... Profitability? He pays you 6% of sales plus 2% advertising, and he lost $15,000 this past year? Did you remind him that you didn't guarantee him a profit? What did he say to that? Oh my God! Well, just calm down. We all know you aren't insensitive. And as for those other things.....well.... You're not your brother's keeper, right? Doesn't it say that on the sign above your desk? Oh, I just remembered, is this the guy with the girlfriend on his payroll and the Lear Jet on his books? And depreciation on the Lear Jet doesn't cover the girlfriend's expense account, as I remember.
Well, if you were really an insensitive guy you could have suggested he ditch the girlfriend. Then the depreciation on the jet would more than cover royalties and advertising, right?
Whadayou mean you don't want to come across as being that cynical? Maybe you ought to refer him to the contract. You know, the clause that says you're always right and everybody else is always wrong. Oh, you did that. And what did he say about that? He called you a narcissistic, egomaniacal what? Gee! He sounds really upset, doesn't he?
What were his other problems?
He thinks you shouldn't make a profit when franchisees buy stuff from you? We did disclose that in your UFOC. But more importantly, why would you invest in a distribution facility and not expect a return on it? Did you ask him whether he tried to earn a profit on everything he sells? Well, you just can't please some people. Anyone else he buys from is going to make a profit. Why should a transaction with you be anything but a normal market driven sale? Oh, you told him that? I think there has to be some other agenda going on here, don't you? In my experience, when people start talking nonsense, they're in pretty deep trouble and are just thrashing around.
You know, I think this is a guy who needs an audit real quick. I bet there are some real problems he doesn't want to own up to and can't face. You're gonna lose him if you don't get a handle on what he's up to.
Yeah, you have to learn to recognize the signs, even when they are far from obvious. You can't possibly help him if you don't know the whole picture. You know he'll resist the audit, because he doesn't want you to know how bad it really is, but you have the right. And, I'll tell you something. If you don't do the audit, later on he'll claim that you could have analyzed his business and tried to help, but you really didn't care enough to do it. Yeah, that is a shame about attitudes, ain't it. But you know that's the place to start. Point out that you have the right in the contract to do it and that the books better be ready when your auditor gets there. And in this day and age, look for things that are misidentified. Don't just look at numbers. Look for receipts and checks, and especially credit card itemized charges.
You're right. Maybe he won't change anything. But you will have tried and you'll be able to show that you tried. And, for all you know, there may also be an under reporting issue here. The time is ripe for this, my friend, and you just have to go do it. It's best for him just as it is for you, unpleasant though it may be. Bad news can't wait.
Copyright 1997 - 2010 || Richard A. Solomon
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 | Licensing, Technology Transfers, |