Tan franchise wound-up for misleading franchisees.
Two companies who misled members of the public with false statements about their tanning and cleaning franchises have been wound up following an investigation by the Companies Investigation Branch (CIB) of The Insolvency Service.
The Warrington-based companies of Tan Kwik (UK) Ltd, who supplied tanning equipment franchises and Kwik Jet (UK) Ltd, who provided cleaning service franchises, sold franchises at a cost of between £20,000 and £60,000. Both companies who used a call centre in the town to refer customer sales to their franchisees, failed to base their claimed potential earnings figures on performance or pilots of their franchises. The companies gave potential franchisees sales figures that were not commercially or realistically achievable.
Not only did Tan Kwik (UK) Limited use unrealistic sales figures, the company based its figures on 100 per cent rentals - an unsustainable claim because of the seasonal nature of the franchise, it also failed to maintain adequate accounting records in relation to the company's expenditure.
CIB's investigation also found that: contrary to the British Franchise Association code of ethics and to good business practice, the potential earnings figures given to prospective franchisees were not based on the performance of actual or pilot franchisees; examples given of the performance of actual franchisees were incorrect; that the companies did not have any system in place to monitor the performance of franchisees in order to consider whether or not it was still appropriate; for these figures as to potential earnings to be given; and that the companies persisted in making these statements as to potential earnings, when it knew or ought to have known that franchisees were not performing at that level.
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