THE CHALLENGE Just five months after opening his three locations in the District of Columbia, Mr. Burris — a former director of advertising and media sales at the International Franchise Association — learned that his franchiser had declared bankruptcy in Australia. Without the parent company to support its franchisees with marketing and supply contacts, Mr. Burris and the other nine franchisees based in the United States struggled with what to do next.
THE BACKGROUND Mr. Burris had learned about Rent Your Boxes, which was called Hire a Box in Australia, at the 2009 West Coast Franchise Expo in Los Angeles, which he attended as an employee of the franchise association.
The idea for the business had particular appeal for Mr. Burris, who just three days before arriving in Los Angeles for the trade show had experienced a nightmarish move in which he found it difficult and expensive to acquire boxes. Mr. Burris met the Australian founder of Rent Your Boxes at the show.
“When he told me what his business was, which involved renting heavy-duty corrugated cardboard boxes, I thought one of my colleagues had put him up to it,” Mr. Burris said. “But I eventually gave him my card and told him that if he ever decided to start selling franchises in the U.S. to give me a call.”
While Mr. Burris enjoyed his job at the franchise association, he was open to the idea of running a business of his own, especially after the death of his wife a year earlier — which left him to raise his three children, one of whom is mildly autistic, by himself.
“I wanted a business my kids could run even if something happened to me,” he said.
When a representative of Rent Your Boxes contacted Mr. Burris in October 2009, he decided to take the leap and become the first of what would be 10 United States-based franchisees.
He flew to Australia for a few weeks to shadow franchisees in Melbourne, Sydney and Brisbane and to learn how the businesses worked before returning to the United States to open his first store.
Then, in March 2010, Mr. Burris said, he and his fellow franchisees received an e-mail informing them that the parent company had filed for the Australian equivalent of Chapter 7 bankruptcy. They were told, he said, that the business was being liquidated. “The rug got pulled out from under me,” Mr. Burris said.
While he was devastated by the news — especially the fact that the thousands of dollars he had paid in franchise fees and for related investments, like the purchase of a delivery van, were gone — he identified a possible silver lining: Despite multiple requests, the founder of the chain had never signed a final version of Mr. Burris’s franchise agreement.
That meant, he concluded, that regardless of what happened in the Australian bankruptcy court, Mr. Burris was essentially a free agent. And because his business was thriving, he believed he might be able to organize the other United States-based franchisees into a new business. He immediately bought a new URL, RentOurBoxes.com, hired a designer to create a new logo and put in an application to trademark the new name.
In July 2010, Mr. Burris called a meeting of the nine other franchisees, many of whom were first-time business owners, and offered them a deal: If they banded together, they could hire a lawyer to help them sever their ties with Rent Your Boxes and begin operating under the new name. All nine agreed, and the 10 franchisees resigned simultaneously. “That was our Independence Day,” Mr. Burris said.
At first, the company operated like a democracy, with business decisions — such as which suppliers to work with, whether to accept new franchisees or how to advertise — decided by committee. But the franchisees rarely saw eye to eye, partly because they operated in different markets.
“Everyone else was located in suburban areas while I was the only one based in an urban area,” Mr. Burris said. “Plus a lot of them were still angry because they thought all they would have to do in their business was fulfill orders. They never planned on having to build up their own market.”
As the committee approach grew increasingly counterproductive, Mr. Burris decided he needed to make a change.
THE OPTIONS Because he owned all of the intellectual property related to the new company, he considered taking control of the situation. If any of the other franchisees wanted to continue using the Rent Our Boxes brand, that person would need to sign a license agreement, which would involve a percentage split of the revenue. If the other franchisees did not agree to his terms, they would be free to exit and run their companies under different names.
Article source: http://feeds.nytimes.com/click.phdo?i=38b494c0e045d309e5eb8458a6654980
