Do DonutNV Franchise Sellers Support Free Speech & Full Disclosure?
Does DonutNV respect prospective franchisees enough to allow them to speak candidly with EVERY franchisee or former franchisee? Or do they believe prospective franchisees are to be treated like mushrooms: kept in the dark and smothered with B.S.? I share my concerns and respectfully ask Alex Gingold & Amanda Gingold for clarification. by Sean Kelly
Also read:
Is the DonutNV Franchise Too Good to be True?
Franchise Brokers: Have ZERO DonutNV Franchise Owners Failed?
DonutNV Franchise Earnings Claims: Accurate? Or Intentionally Deceptive?
DonutNV Franchise Disclosure Document (FDD) Amended 4/29/24 (PDF)
Unhappy Franchisee Letter to DonutNV 12/30/24
Prompted by decades of franchise scams and deceptive sales tactics, in 1979, the Federal Trade Commission (FTC) enacted The Franchise Rule in an attempt to ensure that individuals and families considering investing in a franchise venture had full and accurate information they deemed necessary to make an informed decision.
The FTC determined that in order to make an informed decision, prospective franchisees should have access to the candid opinions and experiences of both current franchisees as well as franchisees who recently left the franchise system being researched. For this reason, all franchisors are required to provide prospective franchisees with a complete list of current and recent franchisees and their contact information in their Franchise Disclosure Document (FDD).
Over the years, some franchisor attorneys and their franchise selling clients have worked together to devise creative ways to sabotage both the FTC protections and prospective franchisees’ right to full disclosure & thorough due diligence.
Trick #1: Forced Confidentiality Clauses to Hide Negative Outcomes or Opinions
Franchisors who do not believe prospective franchisees deserve to know of potential negative outcomes or challenges to their carefully crafted success stories will force failed, terminated and/or unhappy former franchisees to sign confidentiality agreements (gag orders, NDAs) to thwart protections of the Franchise Rule and the 1st Amendment.
The 2024 DonutNV Franchise Disclosure Document states:
Confidentiality Clauses
In the last three fiscal years, some franchisees have signed a contract, order, or settlement provision that directly or indirectly restricts a current or former franchisee from discussing his or her personal experience as a franchisee in our system with any prospective franchisee.
The DonutNV FDD states that only two franchisees left the system (by selling their franchises – not ceased operations) in the previous year.
Why would it be necessary to silence them.
Trick #2: Missing or Incomplete Franchisee Contact Information
Exhibit F of the 2024 DonutNV FDD and the Amended 2024 FDD states:
Former Franchisees
Name, city and state, and current business telephone number, or if unknown, the last known home telephone number of every franchisee who had an outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under the franchise agreement during the most recently completed fiscal year or who have not communicated with us within 10 weeks of the disclosure document issuance date:
Despite stating that they are providing the “current business telephone number, or if unknown, the last known home telephone number” of their former franchisees (as required), they include no telephone numbers.
They REALLY don’t want prospective franchisees speaking to their former franchisees, it seems!
Trick #3: Prohibit Unsupervised Participation in Online Groups or Forums
DonutNV appears to have no restrictions on the dissemination of positive hype and propaganda nor casual use of earnings claims & irresponsible hyperbole (“insane profits!” “this donut food truck is changing lives!” “Sweet success multiplied by 100 [franchise partners]!”*).
It appears that DonutNV is more restrictive and less tolerant when it comes to franchisees sharing their experiences or expressing potentially negative opinions. 7 months after issuing their April 29, 2024 FDD they issued an amended FDD that includes this clause and penalty:
4.8 Participation in Unauthorized Social Media Groups. Franchisee shall not, directly or indirectly, participate in any social media groups or websites in his, her or its capacity as a DonutNV franchisee, or otherwise refer to or discuss the Business, DonutNV Franchising or the DonutNV brand on such groups or sites, without DonutNV Franchising’s prior written consent, which DonutNV Franchising may grant or withhold in its sole and absolute discretion. In the event Franchisee violates the obligations set forth in the forgoing sentence, Franchisee shall be deemed to be in default of this Agreement, and DonutNV Franchising shall have the right to charge Franchisee $1,000 per occurrence for any such violation. This fee is a reasonable estimate of DonutNV Franchising’s internal cost of personnel time attributable to addressing the unauthorized participation, and it is not a penalty or estimate of all damages arising from Franchisee’s breach. This fee is in addition to all of DonutNV Franchising’s other rights and remedies (including default and termination under Section 14.2).
Two questions: Why would a franchisor claiming to have no failures, only two franchisees who sold their franchises, and an 80% profit margin be so worried about what their franchisees might say?
Second: Are Franchise Fastlane, Franchise Sidekick, IFPG & hundreds of commissionable brokers across the country required to seek approval before mentioning the DonutNV franchise in social media groups or forums?
*FYI “franchisees” are not “partners.” 100 franchises sold does not mean 100 successful franchisees.
We Have Asked DonutNV, Alex Gingold & Amanda Gingold to Clarify their Stance on Free Speech & Full Disclosure
Franchise consultants, brokers and other promoters should be aware of whether DonutNV believes in proactively hiding dissent & negative outcomes or defending prospective franchisees’ right to ALL information and opinions.
See our Letter to DonutNV, Alex Gingold & Amanda Gingold re: Free Speech & Full Disclosure
Do You Believe the DonutNV Supports Free Speech & Full Disclosure?
Are you familiar with the DonutNV franchise opportunity? With Alex & Amanda Gingold?
Are you familiar with Franchise Fastlane? With Jake Hamburger? Jennifer Cain? With Mike Flowers?
Which franchise consultant / broker introduced you to this exciting opportunity?
Please leave a comment below or email us, in confidence, at UnhappyFranchisee[at]Gmail[dot]com.
Franchisors: The franchisor, its employees and agents are invited to submit correction, clarifications, rebuttals or other opinions for immediate consideration.
UnhappyFranchisee.com is not associated with this or other franchise company or seller.
Tags: DonutNV, DonutNV FDD, DonutNV Franchise Disclosure Document, mobile donut business, lil orbits, DonutNV confidentiality agreements, DonutNV NDAs, DonutNV profitability? DonutNV franchise earnings, donutNV franchise opportunity, Franchise Fastlane, Alex Gingold, Amanda Gingold, Jake Hamburger, Jennifer Cain, Mike Flowers, Franchise Sidekick, Franchoice, IFPG, Kim Daly, Justin D. Csik, Klehr Harrison Harvey Branzburg LLP
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