WSI - Worldsites WSI Internet 'scam'. Misleading and Deceptive promises for website development Toronto Internet

I am an Australian Worldsites franchisee who lost a lot of money after 'investing' in a WSI / Worldsites Internet franchise. I'd like to share my story, my experiences, my beliefs and remaining questions about this operation. Please excuse the method with which I have put this together. This is not meant to be a literary masterpiece. I want to keep this short and to the point as possible. 700 offices?

1. WSI used to be called Worldsites

2. WSI own website (http://www.wsicorporate.com/profile.asp) suggest that they have not only sold 700 franchises but that absolutely all of these are active and using their systems. I don't understand how they claim this figure under the WSI banner. I would strongly suggest that the majority of them must have surely been sold under the Worldsites banner.

3. How many of those franchisees are left standing? Of those how many are profitable? In Australia, there used to be around 45 franchisees and from what i can gather only about 5 are left active.

4. I would suggest any left standing are there because they have had extensive sales experience or web experience, they are not there due to any amazing systems WSI has provided them!

5. WSI will always have their shining lights that they can point to. As a prospective franchisee, you need to speak to the failed ones as well. Get a profit and loss statement

6. In buying a Worldsites franchise, I thought that the best test would be to talk to as many of the Australian franchisees as I could - and most of them painted a rosy picture and encouraged me to join up. It is my belief that the franchisees that i spoke to did not give me the whole story.

Rather, they represented that the situation was far better than what it actually was. I think their support of Worldsites was largely motivated by the fact that they had invested their own hard earned and now were putting on a brave face in the hope of a turn around. I think they didn't want to admit that they had done their money and besides, another franchisee would make a stronger network and input more cash to help the Master Franchisee out so in turn helping themselves. The lesson here is always get a profit/loss statement from the positive franchisees. A chameleon

7. When I bought a Worldsites franchise, much fanfare was made out of their amazing systems and how happy their franchisees were. If they were so successful, why did they change the company from Worldsites to WSI? Surely nobody would change a successful brand name (as they claimed they had) just for fun. I would suggest that management formed WSI to dissassociate themselves from Worldsites to stop (or make it more difficult for) lawsuits being filed against them by very unhappy franchisees (or perhaps they just went plain broke?). Make a point of testing your friendly WSI sales rep by asking him/her why they changed their identity.

8. Even the Australian Master Franchisee Nigel Brunel has changed the title of his web development operation from Worldsites Australia to Multi Stream. WSI has 'independent' friends 9. Consider this before believing any 'independent' reports. One of the major champions of WSI is www.entrepeneur.com Type 'WSI' into a search engine and almost all you get is articles on WSI published by these guys. This franchise directory is produced by the editors of Entrepreneur Magazine and guess who they championed? You got it - Worldsites! This is a copy of the 'propaganda' that I was given when considering my amazing Worldsites investment opportunity. What have you been given? There is no doubt WSI are great marketers

10. As WSI (and any good salesperson) would know, people buy emotionally and then explain rationally. Try removing the emotion from your decision to buy a franchise and you will find yourself well served.

11. The claims made today are scarily close as those made back in the Worldsites days. How can one believe that what they provide now is any better than before in terms of actually making you money?

12. One of the claims used in Worldsites marketing was along the lines of "We are the McDonalds of the Internet". Really? This seems to me to imply a business that has a high profile and a high ratio of successful franchisees attributable to great systems. Ask 1000 people and see if any body has heard of WSI. Get the facts on how many of their 700 franchisees are successful and attribute that success to WSI systems. Check out point 22 - Franchisees on different continents that have never met can't be wrong! Not seen or heard of again. In the contract which I and many Australian franchisees signed, it clearly stated

13. (Point 5) 'the franchisor shall:' (Point 5a.) 'develop the first twenty (20) "Internet Solutions" projects for the Franchisee for which the Franchisee will pay the Management Services Fee equal to ten percent (10%) of the Gross Revenues in respect of the Products or services sold. In the event that the Franchisor develops the "Internet Solutions" project for the Franchisee's business, then the Franchisee shall pay a total Management Services Fee equal to the greater of: thirty percent (30%) of Gross Revenues of the "Internet Solutions" projects, or, such minimum Management Services Fee as specified by the franchisor from time-to-time'. Now, this is a mouthful and makes little sense but Worldsites franchisees took this to mean that the cost to develop their first 20 websites would be fixed at 20% plus the 10% Management Services Fee (of revenue). This development cost structure was never mentioned again and was instead replaced with various fixed production costs from Canada and Australia with no warning or indication that the rules had changed. This pricing structure made it extremely difficult to quote competitively (see Point 22 again - the NZ franchisees faced exactly the same problem).

14. (Point 10.1) States that a Co-Operative Advertising Fund 'CAF' would be established for the purposes of advertising. Ask any Australian Worldsites franchisee and they will tell you that the 'CAF' was a part of the franchise sales pitch and was promoted as a wonderful system by which they were expecting to fund their promotion. Unfortunately the contract also states that the 'CAF' was to be carried out to the Franchisor's discretion and carried out at their discretion they did! This was meant to be paid into as a flat rate per website sold. As you'd expect of a professional organisation, one would think that a report of this CAF would be made on an annual basis (at the least). I do not know of a single franchisee who knew of any details of this CAF whatsoever outside of being asked to pay for it when they sold a website. How much money had been put into this fund-where did it go? Who knows? I think that little money was attributed to this so called fund due to very few website sales. I believe nothing more was said about the fund as it would have been proof of what everybody seemed to be thinking anyway - that not many websites were being sold and in turn no promotional work was going to be performed to help the situation.

15. (Point 6.2.2) The contract also stated that franchisees will pay a minimum $100 a month Management Services Fee. I refused to pay it and i do not know of any franchisee that did. I think the Master Franchisee was embarrassed to ask for it and in my opinion head office would have been fearful of triggering law suits if they tried to enforce it. More marketing

16. I don't want to harp on the contract as I don't believe it's worth the paper it's written on. The point is the Worldsites operation seemed to have very little regard (at least in my case but read Point 22 and make up your own mind as to how others found them) for providing what they said they could do or would do (both in the contract, verbally and in various marketing material). Let's take a look at some of that material

17. The Franchise Magazine - March/April 1999 edition (a UK publication) has a lengthy article (which, to read now is pretty obviously a press release from Worldsites). You can read the 4 pages here. On page 2 it states "If franchisees choose to become involved in the technical development area of the business, they can rapidly and economically produce world class websites, customized to the needs of specific businesses through the use of the Worldsites Software Suite" and page 3 also talks about "comprehensive technical training,..operation of the Worldsites software suite". This amazing 'Software Suite' or any extra technical training was never spoken about nor even seen in my time with Worldsites! Page 2 also states "Worldsites system offers franchisees the opportunity to retain 70%-90% of their revenues as gross profit". Sound familiar? Page 4 states "Great emphasis is placed on a broad market awareness of the Worldsites Network system". This goes back to the 'McDonalds' claim and the 'CAF' plan. Whilst on page 4, check out the image with the footprint (I suppose it's on the moon) - what's all that about? How does that fit? Remember what I said about removing yourself emotionally? Obviously at the time I was too emotionally involved when I bought in! Also on page 4 "Whatever the need, through shared know-how in the franchise network" I doubt the truth of this amazing statement. I am convinced that franchisees were systematically restricted from contacting each other so we couldn't compare notes. A bit more about that great training

18. "We have everyone from doctors, bankers, nurses, engineers, homemakers" spouted Nigel Mayne (President of Worldsites and WSI - I might add I'm not exactly sure if Mr Mayne is the current president but you'll probably find him lurking in there somewhere) in another Franchise Magazine article and I guess that's part of the problem. How do you train non-sales, non-technical people in a week how to be great sales people and thoroughly understand how websites work? You can't! I'm fairly bright but I was non-technical and non-sales before I went in to training and had not being transformed when I came out. They love their great support

19. Believe it or not, there is a bit to be known about databases, operating software, hosting, bandwidth speeds etc (all the things you need to project manage a website development) to be confident in front of a client and to quote a job accurately. When I was faced with technical questions, quite often I had to trot back and email technical support on what I needed to know, wait for a reply and then usually write a three page essay to expand on the request and wait for a three sentence answer. This is a very time consuming and frustrating experience! What do you think happens to your prospective clients confidence in your ability to act in this situation? You can rely on Franchise Support.

20. I have little to say apart from the support given here was a total waste of my time and they seemed to exist to do nothing more than pay lip service. In many cases I knew more than they did. The support people rotated quickly and always seemed to be 'just learning'. I would believe that as individuals they did want to help. Exactly how can they help when they are half way around the world? The lesson here is quite often you need face to face contact for answers and help.

21. I believe that the Australian Master Franchisee knew things were bad when he sold me my franchise. I suspect he knew things were terminal which makes me very angry indeed. Part of the Australian experience was compounded by the fact that the Master had no previous experience in franchises and little previous experience in web development. He was in fact a stockbroker by trade who happened to have enough cash to buy the Master Franchise. What sort of organisation would have a stockbroker for a Master Franchisee with no franchise or software development experience? I do feel for Nigel Brunel though as he and his partner must have been inundated for requests for help as franchisees struggled. Here is a letter i recieved that illustrates the point. So much for the amazing systems, training and support. Get acquainted with who you are dealing with

22. Read this Document 1 and Document 2 concerning legal action involving many of the New Zealand franchisees. They used to exist on the http://xtramsn.co.nz web site but have since vanished.

23. Try the Masterfile case here http://www.e-commercecanada.net/Archives/June5/body_june5.html and here http://decisions.fct-cf.gc.ca/fct/2001/2001fct1416.html

24. Who exactly are WSI? Where is the parent corporation based? Does it have any assets? Where will any litigation take place? If it's Delaware watch out. Delaware is considered to have the most corporation friendly courts in the world.

25. Thoroughly read every thread and every post about WSI and Worldsites on this chat rooms www.franchise-chat.com/forum/forumdisplay.php?s=&forumid=5 and also try Google Groups. Try other groups whilst you are at it. Beware

26. Before 'investing' in one of these 'Internet Franchises' ask yourself, how much will it hurt? If it's going to hurt a lot do a lot of investigation and use the tips I've provided. My estimation is that this has cost me about $100 000 and 5 financial years with the initial franchise investment, other associated costs and lost opportunities. In terms of emotional ageing, I would estimate probably 10 years has been taken away from me with the stress, frustration, anxiety and loss in faith in human beings. This is the worst side effect of all and I wouldn't wish it upon anybody. 2 last things before I go

27. There are other options outside of WSI. Try Mr Web developer on the corner or somebody like www.hostingbay.com.au.

28. Don't do as I do and think "If they don't do as they say they will do, I'll just sue and get some justice". You could quite possibly be too broke and burnt out to pursue this avenue. This is how many of the Worldsites Australian franchisees feel/felt.

29. I'll be happy to receive any information or contact from other WSI/Worldsites franchisees that want to make themselves heard. Email me at exfranchisee@hotmail.com Best wishes, Best of luck Exfranchisee

P.S. Not convinced? Try these 3 emails from other franchisees (there are many more where they came from!).

P.S.S. Since writing the piece above i have stopped WSI advertising on another established website and 'saved' 3 people (that i know of) from buying a WSI franchise. One had even paid a deposit! Here is what one of them had to say.... "I am a person with considerable experience in the development of web sites. While WSI may or may not have a good idea, it made me uncomfortable that they require payment in advance of a true commitment on my part. As I understood it, I was to pay 25% of the total at one stage "within 24 hours"... and at the final stage, if accepted, you pay the remainder within 5 days. I am new at the franchise investigation process, but this payment scheme made me uncomfortable. Although the company promised to return the 25%, if I changed my mind, in effect you are an unsecured creditor and you would have great difficulty in obtaining a refund if the company had financial problems. Personally, I would not give anyone 25% or $10,000 dollars to someone I have never met. I decided to consider other options as a result. Perhaps you should too?" And from Another "Thank You!!! I think you just saved me $40K and a lot of sleepless nights. The deposit has been mentioned but, thankfully, I saw your site before getting in too deep. With no sales experience and little technical ability I am amazed how I keep on passing all of the 'selection interviews' given 'the hundreds of calls a week' they have to deal with!" John NSW
Australia