Franchisors Continue Bogus Claims Despite IFA Plea
WASHINGTON (Blue MauMau) - The International Franchise Association has asked franchisors to stop spreading claims that franchises are safer than independent small businesses. The organization issued a letter in 2005 urging members to "remove from their Web sites or printed materials "any information claiming that the success rate of franchised establishments is much greater than that of independent small businesses," calling the information "potentially misleading."
The IFA sent out this letter to its members in May of 2005. Alisa Harrison, Vice President of Communications and Marketing for the International Franchise Association, on Tuesday emailed the original document and its continuing relevent message to Blue MauMau.
A message from International Franchise Association
President Matthew Shay
May 2, 2005
Dear Friends:
It has come to our attention that some IFA-member companies may be providing information about franchising that is long out of date and no longer presents an accurate picture of the sector.
Of particular concern is information claiming that the success rate of franchised establishments is much greater than that of independent small businesses.
Many years ago, the U.S. Department of Commerce conducted studies about franchising which presented such statistics. That information is no longer valid. The agency stopped conducting such studies in 1987.
We strongly urge you to remove any information from your Web site and published materials that make such a claim. The use of such data, in the absence of current research, could mislead prospective franchisees who are attempting to conduct responsible investigations.
The International Franchise Association’s Educational Foundation recently released a study, The Economic Impact of Franchised Businesses, conducted by PricewaterhouseCoopers, which offers the first comprehensive view of franchising’s economic impact. This study, available at www.franchise.org, contains information that could be helpful to prospective franchisees and others in determining the size and scope of franchising.
Another study available on the IFA Web site is The Profile of Franchising, which collected data over three years from UFOCs and offers data averages on such important aspects of franchising as unit turnover, initial franchise fees, initial investment levels, contract terms and renewal, royalty and advertising fees. We recommend that you review these two studies and share the information in them instead of perpetuating outdated and potentially-misleading information.
As a member of the franchising community, you serve as a gateway to future generations of franchisees and entrepreneurs. Please join IFA in making an effort to present an accurate picture of franchising.
Sincerely,
Matthew Shay
President
International Franchise Association
Ms. Harrison notes that the economic impact study mentioned in the letter refers to an initial study. The IFA has released a second, updated study this past April.
At the end of 2008 many sellers of franchises continue to push such messages, despite this IFA's efforts to stress that it is inaccurate to say that an average franchise is inherently safer than owning an average independent business.
One example is Central Bark Doggy Day Care. Its Website misleadingly declares, "While 40% of all startup businesses fail within the first year and 80% within the first five years, the U.S. Department of Commerce reports that every year since 1971, less than 5% of franchise-owned outlets have been discontinued as a result of business failure."
Central Bark Doggy Day Care is a member of the IFA.
In the United Kingdom, Brian Duckett, an Oxfordshire-based chairman of Howarth Franchising Group, reiterates that buying a franchise is safer than owning an independent business. He writes in The Oxford Times, "Even in the current economic climate, all the major clearing banks which have specialist franchise sections are keen to lend money to franchisees. This is because it has been proven to be many times safer than lending to independent start-up businesses, more than half of which disappear before their fifth birthday. The failure rate for franchisees is less than five per cent a year."
Mr. Duckett does not provide sources for his figures.
In the United States, many sellers of franchises have shifted to claims in the media and on their web sites that franchising is a "proven" and "safer" system. For example, All Business, a web journal of business news and resources, states, "As many first-time business owners find out, there is a high failure rate for independent, non-franchise businesses. Franchising provides a proven system and the support of a much larger organization."
The IFA would remind sellers to cease and desist such industry claims.
Jim Coen, a franchise consultant based in the Boston area, thinks it is a worrying sign when a franchise system has to piggyback on bogus industry claims to sell a franchise. He asks, "If franchisors want to make a representation about being safer, why don't they do that with their own system? The information already exists in Item 20 of their franchise disclosure document. Why not use that data instead of 'industry statistics?'"
Note: Click the attachment below to see the IFA letter in its original form. The yellow highlight in the letter has been added by Blue MauMau's editor for the reader's convenience.
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Related reading:
- Using Bad Numbers and Logic to Sell a Franchise
- Franchise Statistics Debunked Again!
- List of those using bad stats, Beguiling Heresy, (pgs. 37-44) by Attorney Paul Steinberg
- Foreign Sellers Now Claiming Virtually No Failure with Franchise Ownership
- British Love Bogus Franchise Myths
- Franchise Folklore Finds Home in Britain
- What is the success rate of a franchise versus an independent?
- Startup Failure Rates,The REAL Numbers by Prof. Scott Shane
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| Outdated Franchising Statistics.pdf | 73.1 KB |
I talked to an indepentant Mail Box business
in our town. They got a great deal from the landlord where they do not have to pay rent if they manage the strip mall. They are making a living. The business is called Mailbox and does the same things as UPS. It is a win win situation. They are happy.
Central Bark Doggy Day Care Removes Bad Stats
Rhonda Sanderson of PR firm Sanderson & Associates Ltd has notified Blue MauMau that Central Bark Doggy Day Care has removed the Department of Commerce's figures from its web page. Those statistics erroneously indicate that franchises in general are safer than independent businesses.
In its place, Central Bark's FAQ page now starts out by focusing on the merits of Central Bark's own franchises.
Shoes-n-Feet Uses Bad Numbers to Justify Franchise Purchase
I keep bumping into franchisors using bogus Department of Commerce stats on their websites. Here are those bad stats again. This time it is from Shoes-n-Feet on why investors should buy a franchise from them as opposed to just opening their own business.
Belinda's guide to cat care trumps Doggie Day manual
INSTRUCTIONS TO BOZO
RE CARE OF CATS IN BELINDA’S ABSENCE
Dr. Martin’s Telephone Number - 713 777 0543 South Gessner Pet Clinic
Dr. Yeo Westhollow Animal Hospital -- 281 531 9095
EVENING ASSIGNMENTS
Get mail out of box. Leave on kitchen table.
Be sure to close door quickly when going out front or back doors. Cats try to run out. Lock doors when you come back inside both front and back.
Feed Cowboy and Little Girl hard food in their room (my office). Food is in the closet. Don’t over feed them just cover the bottom of the dish. Clean box in their room. Scoop into basket under sink in bathroom. Leave them locked in their room to eat.
Clean 5 other Cat Boxes.
Refill the front door dish with hard food for outside cats. Also change water.
Feed Booger, Bubba, Cowboy & Little Girl soft food (CD). Feed Bubba & Booger Layered soft food – chicken Iams on the bottom. Chicken CD on top of that. Sweetie Pie gets Chicken Iams with a little Chicken CD on top. Sweetie Pie may want to eat in her room which is the other bedroom in the back. If so, close the door for her to eat. You can give her canned food in one dish and hard food (Science Diet Maintenance) in another. Close the door for her to eat. Feed Cowboy & Little Girl in their room.
Feed Zorro, Precious, Scamp, Frick & Frack canned Fancy Feast chicken. Feed Ace Chicken CD. Stand by Ace while he eats as everyone will try to get his food. Feed Sugar Pie, Puddin, Billy Bob & Kinky Chicken Fancy Feast. If you see Mama Kitty, put some Fancy Feast Chicken in bowl and give to her.
Add Food in garage – outside cat food (pink bowl), hairball food (blue square bowl), Kitten food (2 sides blue bowl by car tire) & one outside cat food and kitten food (red square dish)
Add water to all outside water bowls. Make sure water is cool for Ace. Get cool water out of refrigerator door.
Scoop out cat boxes in garage. Scoop is above the largest box . Put poop in plastic bag in red bag and close up. Turn on the overhead light in the garage and the spotlight in the drive way. Turn on the outside light in the back. Switch is right by the kitchen door going outside. They are the two left switches. Leave these lights on all night.
After outside kitties are fed, then feed Booger, Bubba, Cowboy, Little Girl and Sweetie Pie, if she is not already eating in her room, their hard food. Booger and Bubba get CD hard food. Sweetie Pie gets Science Diet Maintenance. Just cover the bottom of the dish. Don’t give them a whole bowl full. If these 3 eat together, please stand by so the boys don’t eat Sweetie Pie’s food. They will try.
Let Sweetie Pie, Cowboy and Little Girl out of their rooms if locked up. They can go out in the atrium during the evening if they want to. Be sure they come in around 8:00 pm. Booger lets you know when he wants in by looking in the window at you.
Be sure the screen door is propped open with bricks. Turn off the overhead light in the garage. Pick the food dishes up and put in the cooler in the garage around 9:00 pm.
Before going to bed – lock Cowboy & Little Girl in their room. Feed them a little hard food. Be sure they have water for the night.
MORNING ASSIGNMENTS
Clean 5 Cat Boxes
Change water in bowl in master bedroom
Then feed Cowboy & Little Girl Hard Kitten food in their room. They will still be locked up from the night before. Food is in their closet. Refill the water bowl in their room. Clean box in their room. Leave them locked in their room to eat.
From the basket, dump the used litter in the trash can in the kitchen. Be sure to cover the trash when you finish feeding or when you leave the house. Cowboy will sometimes jump in the trash.
Feed Mama Kitty Fancy Feast Chicken if she is out front. Refill front Outside cat food bowl – Change water
Pick up newspaper in the front yard. Close and lock front door quickly.
Dish up and feed Booger & Bubba (chicken Iams on bottom & top with CD), Cowboy, Little Girl & Ace (CD) – Sweetie Pie - Chicken Iams soft food with a little CD on top. Zorro, Precious, Frick, Frack, Puddin, Sugar Pie, Dude, Kinky, Blue - soft food – Fancy Feast Chicken
Feed Booger, Bubba and Sweetie Pie. Feed Cowboy and Little Girl soft food in their room. Keep door closed.
When they finish, then feed Ace, Precious, Zorro and the rest of the bunch. Stay with Ace so Zorro doesn’t get his food.
Refill outside bowls for Ace, Blue, Zorro & Precious – Outside cat food, hairball food & Kitten food
Change water in bowls in garage – ice and water for Ace in plastic cup. Get this out of the refrigerator door.
Clean 2 garage litter boxes. Put poop in bag and place in the red bag in garage. Refill litter boxes when needed but don’t put too much.
Feed Booger & Bubba hard food (CD) and feed Sweetie Pie hard food. Don’t let the boys get Sweetie Pie’s food.
Change the water in the frog bowl in the kitchen.
Let Cowboy and Little Girl out of their room.
You’ll need to wash the cat dishes after everyone is finished eating and leave in the sink to dry. Rinse off the spoon you use for food. Use the small pitcher for watering.
Turn outside lights off in the back and in the driveway.
Before you leave, be sure the screen door to garage is propped open and braced on both sides with bricks so the wind can’t close or open it. Cats go in and out. Lock front and back doors when you leave. Be sure to close the gate in the back so that the wind doesn’t open it. Don’t want Ace to wonder out.
Refill the litter boxes if they get low. There is a bag in the closet in Cowboy and Little Girl’s room and also extra bags in the garage.
You can put the trash out Tuesday night. Trash people come on Wednesday morning. Put outside on the far side of the garage in a plastic trash bag.
There is extra key in the garage in the brown piece of furniture in the second drawer on the right. In case you lock your self out.
2 remotes for the TV in the living room. The silver & black one turns the TV on and off. Also use it for volume and mute. The black one is to turn the cable on and off and changing channels.
312, 311, 313 are HDTV channels.
If somebody throws up, (it’s usually Bubba after he eats, there are paper towels on the cabinet in the kitty bathroom and woolite spray. Use the spray if they throw up on a rug. Squirt some woolite on the spot. Let it set a few seconds and wipe up with paper towel. Put in trash. There are more paper towels in the cabinet in the same bathroom.
Kitties names and descriptions are:
Inside Kitties
Booger- Orange tabby with white under neck
Bubba – Orange Tabby not much white under neck
Sweetie Pie – White and Tabby with pretty face
Cowboy – Gray kitty
Little Girl – Grey & Brown Tabby. No white
Outside Kitties
Ace
Zorro – Black kitty
Precious – Fluffy grey tabby with black stripe down back and tail
Blue- white kitty, blue eyes
Mama Kitty – tabby with half tail cut off
Frick- grey tabby
Frack- brown tabby
Puddin – white and brown
Sugar Pie – white and brown
Dude – brown tabby
Kinky- biggest white and Brown
Cell phone #s are
Muldoon 832 721 1891
Aunt BI 281 381 6841
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Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
A new definition....
After reading those instructions, I think I have discovered a new meaning for pussy-whipped....
Re: a new definition...
we've also been given some enormous enlightenment
90% success: Zor files Chap 11
Another franchisor which was quoting bogus 80-90% success rates was Brooke Franchising, an insurance franchise of dubious provenance.
Kudos to Sean Kelly, who brought this franchisor to light on his blog back in October of 2007.
On November 10, 2008, Brooke went into Chapter 11 with nobody answering the phones.
Bogus earnings claims are a hallmark of bogus franchisors.
Those who heeded Sean's article a year ago could have saved themselves a lot of money, and a lot of embarrasment in their local community.
Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400
Fake Earnings Claims
We could also include "be your own boss" as necessary and sufficient for a Franwhack.
Michael Webster, a franchisee attorney in Toronto, Ontario, who publishes a website on business opportunities and franchises, called "The BizOp News"
I believe "Be Your Own Boss!"
Is the biggest lie told to future zee wannabees. That is a statement that traps most future zees. When reading the UFOC numerous times you see the UFOC is all about protecting the zor. The zor is your boss. Everything is the zor.
Re: I believe "Be Your Own Boss!"
Geez... Sounds like you guys picked the wrong franchise system! I am sincerely sorry for your loss.
Mandatory Due Diligence
That is what I want but damn it; everyone looks at me as if I'm crazy. I don't like to be told anything is impossible when there is no meat in the "why not". If it is the biggest problem in franchising why the hell can't it be written into law and where it has to be regulated?
"You cannot educate the stupid". But you can lock them out.
?
What is mandatory due diligence?
People either want to take responsibility or take a chance.
No law is going to make that different.
You pay a heavy price in this world for being both greedy and stupid.
Michael Webster, a franchisee attorney in Toronto, Ontario, who publishes a website on business opportunities and franchises, called "The BizOp News"
Re:?
I cannot abide the idea of mandatory due diligence any more than I can stomach more impending bailouts. Perhaps the Fed Free-Flow can be directed to franchisors next (with proper royalty drainage first at IFA for successful lobbying), then we can line up Quiznos and Cuppy owners outside of bankruptcy court, and so on.
Is it time to bailout the only industry where you are definitely 'not in business for yourself, but always by yourself'?
Nick Bibby is an international franchise consultant and a program developer dedicated to excellence in entrepreneurship.
You can't fix stupid (Larry the Cable Guy 2006)
You can educate the ignorant, but the stupid are never going to benefit from anything you try to do for them.
That accounts for the phenomenon known as "Shirtsleeves to shirtsleeves in three generations". The most brilliant entrepreneur will, within three generations, see a grandson so stupid that he will take the family back into the poverty from whence it came. Very few families have ever overcome that process. We can all name a few that managed to avoid being poor again because somehow they brought in professional management before Prince Bozo III squaqndered it all away to various scammers. I have seen the process up close and personal, having been the litigator to bail out the final awful situation after Prince Bozo III signed his name to one last scam deal, so I know whereof I speak. My Prince Bozo III was a graduate of the Harvard Law School.
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Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School