Xefi Franchisees Revolt: Declining Profits & Growing Disputes
Growing discontent is brewing within the Xefi franchise network, with reports of declining franchise openings, increased defections, and mounting disputes signaling a breakdown in relations between the IT services provider and its approximately 180 franchisees. A recent internal communication revealed that Xefi’s 2025 growth targets are significantly below initial projections, fueling franchisee frustration.
According to sources within the franchise network, many franchisees are finding the Xefi business model less profitable than advertised. Even as a minority of long-term franchisees report success, a significant number are struggling to remain viable, with some having already closed their doors in recent months. “Franchisees are realizing that what is sold to them is far from reality in terms of turnover and profits,” one franchisee confided.
During Xefi’s annual “Starter” meeting in early January, the company presented a 6% growth forecast for 2025, a substantial reduction from earlier goals. Organic growth was reported at just 1%. This shortfall has impacted the company’s profitability, which stands at €11 million, falling short of expectations and forcing Xefi to draw on its cash reserves, as acknowledged by CEO Sacha Rosenthal during a recent webinar, known as Radio Xefi. No figures regarding franchisee profitability were disclosed.
In response to the challenging economic climate, Xefi has urged franchisees to increase revenue and margins, aiming to boost profits from €11 million to €18 million in 2026. Though, this directive has been met with resistance, as franchisees report a lack of enthusiasm and a sense that their concerns are not being adequately addressed. One franchisee described the meeting as lacking substantial announcements or new projects, contrasting with previous years where Xefi successfully rallied its network with ambitious presentations.
A major point of contention stems from retroactive invoices issued to franchisees in late November, covering alleged shortfalls in “safeguard quotas” dating back to January 1, 2025. Some franchisees claim to have been billed as much as €12,000 to €13,000 without sufficient justification. This action has further eroded trust and sparked accusations of unfair practices.
These recent issues add to a list of long-standing grievances, including recurring issues with data backup systems and a malfunctioning monitoring tool. Xefi discontinued its previous system, RG System, at the end of 2024, replacing it with an internally developed solution. Franchisees claim this transition has led to technical problems impacting clients and damaging their reputations. “There are a lot of technical problems, which result in customer cancellations,” stated a franchisee who recently left the network.
Franchisees also report difficulty obtaining credits to offset revenue losses resulting from these issues, forcing them to cover client contracts out of pocket while Xefi avoids responsibility. Fear of retaliation reportedly discourages franchisees from openly voicing their concerns. Xefi, founded in 1997 by Sacha Rosenthal, currently operates 180 agencies in France and internationally, with plans to open six additional locations. The company reported a turnover of €355 million in 2023 and employs 2,000 people. Xefi is currently investing in a new headquarters, dubbed the “IT City,” scheduled for completion in September-October, a project estimated to cost between €50 million and €70 million, but which franchisees say will not directly benefit their operations.