November 21, 2024 Copyright ©️ 2024 by goldkeen International Patent & Trademark Joint Office
Xiaomei wanted to start a business and was drawn to the BELLA dessert franchise model. She spent NT$200,000 to join, believing that by following the company’s instructions—operating 6 to 8 hours a day—she would earn a net profit of NT$138,000 per month.
However, after opening her store, the business didn’t perform as expected. Her monthly net profit was only NT$95,000. Xiaomei felt the company had provided misleading profit expectations and failed to deliver new products such as taro milk and grass jelly milk. She filed a lawsuit demanding a refund of the franchise fee and compensation for the profit shortfall—totaling NT$548,115.
The court ruled that the franchisor had already provided relevant information before signing, including the franchise manual and raw material costs, and that Xiaomei had adequate time to review them. The manual clearly stated that the daily revenue and net profit figures were for reference only and not guaranteed.
Moreover, regarding the taro milk and grass jelly milk, the court found that these were still in product testing before launch and had not yet been offered to franchisees. Thus, the company was not in breach of the franchise agreement or fair trade laws.
The verdict: Xiaomei lost the case.
Franchising can lead to profits or losses. Always review the franchise agreement carefully and research the market thoroughly before investing, so you don’t fall for promises of "guaranteed profit."
This case is based on a real court ruling—and yes, the plaintiff actually complained in court that taro milk and grass jelly milk were not released…
It’s real!!! 😆
Franchisees, take note:
Head offices may provide projected figures, but they never guarantee profits.
So is franchising a good business? That depends—location, location, location!
Bosses who've been through tough lessons are welcome to share their experiences below!
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