Dyno-Rod accused of bully boy tactics by franchises

But the Mail understands some firms who cannot afford the investment and have instead decided to sell are being offered below market valuations by Dyno-Rod for their businesses. Franchisees are fearful at speaking out against the strong-arm tactics, with Dyno-Rod lawyers insisting secretive confidentiality agreements must be signed.

http://www.dailymail.co.uk
November 30, 2010

Dyno-Rod accused of bully boy tactics by franchises
Simon Neville

Drain unblocking firm Dyno-Rod is giving its franchisees a stark choice – invest thousands of pounds or sell your business back to the company.

The Hobson’s Choice is being offered as part of an aggressive restructuring process called ‘Project Obama’.

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Down the drain - Dyno-Rod

But the Mail understands some firms who cannot afford the investment and have instead decided to sell are being offered below market valuations by Dyno-Rod for their businesses.

Franchisees are fearful at speaking out against the strong-arm tactics, with Dyno-Rod lawyers insisting secretive confidentiality agreements must be signed.

Dyno-Rod, which is owned by British Gas and made a £3.8m profit last year, is gearing itself up in preparation for Government plans to transfer ownership of private sewers from householders to water companies next year.

In January Dyno bosses called a meeting in Leicester with all franchisees, where they were told they could either invest to meet the extra demands water companies are expected to put on drainage firms, stay as they are, or sell up.

One person present at the meeting said: ‘There was a sense of shock. Only a couple would sell initially, but soon more became interested and that’s when Dyno-Rod became a lot more aggressive with their buying.’

In one case it is understood a franchisee sought a series of independent valuations for his business and found it was worth nearly three times the value Dyno-Rod offered.

The company, bought by British Gas’ parent company Centrica (down 5p at 311p) in 2004 for £57.6m said it was not forcing any franchisees to change and they could remain as they are.

But franchisees rejected that assessment.

One, who did not want to be named for fear of losing their contract, said: ‘If we don’t invest and don’t sell, we run the very serious risk of losing our five-year franchise when it is up for renewal.

Also, if we do make a considerable investment, how are we to know that we will see a return if each contract lasts just five years? It won’t be enough to make the money back.’

David Walter, director of Dyno-Rod, said: ‘For those who want to sell, we are calculating the value of each company using a financial model which we built internally, with advice from our legal team.

‘It is absolutely standard to sign confidentially agreements in these circumstances.’

He added that if any franchisee was having any problems they could contact him personally and he would try to resolve the issues.

http://www.dailymail.co.uk/money/article-1334396/Dyno-Rod-accused-bully-boy-tactics-franchises.html?ITO=1490


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Risks: Beggars can't be choosers: take what you're given and shut up, Bullying, Forced to invest in unproven concept, Gag order (confidentiality agreement), Intimidation, You'll sign anything to get 15% of what you put into it back, United Kingdom, 20101130 Dyno-rod accused

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