State Securities Administrators Oppose Forced Arbitration in Franchise Agreements

Posted Sat, 2009/05/30 - 18:19 by Don Sniegowski

WASHINGTON, D.C. - The North American Securities Administrators Association, NASAA, announced last week that it fully supports the Arbitration Fairness Act, which makes forced arbitration unenforceable. The Arbitration Fairness Act currently making its way through Congress, which will make binding arbitration agreements before an actual disagreement occurs unenforceable, has been given a boost by being endorsed by an organization of state securities regulators. The North American Securities Administrators Association, NASAA, announced last week that it fully supports the legislation, introduced as S. 931 by Senator Russ Feingold (D-WI) and H.R. 1020 by Representative Hank Johnson (D-GA).

The organization consists of securities administrators that oversee franchise registration in 15 states and investment protection in all 50 states. It announced in a press release that it “seeks to protect the right of Americans to have their day in court by making pre-dispute agreements requiring arbitration for any employment, consumer, franchise or civil rights disputes unenforceable.” It also stated that nearly every security broker-dealer nowadays forces arbitration.

NASAA President and Colorado Securities Commissioner Fred Joseph declared, “NASAA believes this ‘take-it-or-leave-it’ clause in brokerage contracts is inherently unfair to investors and that the Arbitration Fairness Act of 2009 is a positive step in the right direction.” Joseph continued, “As long as securities arbitration remains mandatory, investors will continue to face a system that is not fair and transparent to all. That is why NASAA included passage of the Arbitration Fairness Act as a key component of its Pro-Investor Legislative Agenda for the 111th Congress.”

However, the International Franchise Association, a Washington-based trade and lobbying group representing mainly franchising firms, opposes the Arbitration Fairness Act.

French argues that when it comes to arbitration clauses that have been signed in franchise contracts before any dispute arises, there's a difference. Franchise agreements are signed knowingly by two business entities. French explains, “Franchise contracts are business to business agreements, not business to consumer agreements.”

The IFA advocates that arbitration is one of several effective tools for resolving business disputes.

“There is simply no empirical data to support the notion that arbitration is fundamentally unfair to any party,” says French. “The only thing that is absolutely clear is that franchise disputes will be more costly and more protracted if this legislation is enacted.”

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94 Comments

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Arbitration Fairness Act update by Paul Steinberg

Submitted by Paul Steinberg on Sun, 2009/06/07 - 19:33.

In an article (paid registration) in the Friday New York Law Journal, Neal Eiseman presents a balanced view of the Arbitration Fairness Act, and opines that chances of passage are good.

BTW: For those following the recent battle-of-the-statistics on BMM, Eiseman gives citations to studies on both sides of the issue. Given the disparity, one suspects that these studies have found the results which their backers wished to find.

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

NASAA backing the AFA by Guest

Submitted by Guest on Mon, 2009/06/01 - 08:48.

The IFA’s vice president of government relations, David French, thinks that NASAA, as an organization of securities regulators, are supportive of prohibiting mandatory arbitration agreements because of their concern with abuse with broker-dealer and consumer contracts. Mr. French, in case you have not read the NASAA's position, Franchising is identified in the organizations statement regarding their support for the AFA. “Franchise contracts are business to business agreements, not business to consumer agreements.” You were not very clear on this statement. Are you saying that there is no abuse in arbitration when it comes to franchising, but there may be in broker-dealer and consumer contracts? If so, what leads you to believe that franchising is immune to arbitration abuse? Or are you saying business to business agreements should be excluded from review? “There is simply no empirical data to support the notion that arbitration is fundamentally unfair to any party,” Since arbitration is veiled in secrecy, how would you know? We do have some examples I can share with you. Take our case: An arbitrator was chosen 6 months before arbitration was requested. The arbitrator was picked without our input. The arbitrator did not disclose her relationship with Karl Fink. She lied about her relationship with Jane Johnson of the accounting firm Yeo & Yeo. Even though both sides agreed, the first day of arbitration, that Maryland Law governed the contract, she awarded CONTRARY to Maryland Law. She even awarded for The Coffee Beanery though documents proved the Cafe Concept was still being developed, a million dollars was missing from the Advertising Fund, we were never given a registered copy of the FDD, they lied about marking up equipment and fixtures, and they were knowingly selling a flawed concept that had a life span of 3 years. The only 3rd party contract disclosed, was the contract between The Coffee Beanery and The American Arbitration Association, to settle disputes. Here is a case where The Coffee Beanery was found to have committed fraud in the sale of our franchise by the State of Maryland, and still Arbitrator Barron awarded against us on all counts. Is this what you consider to be fair? I can continue: Jonathan Bayani vs Children's Orchid. Not only did Ms. Barron award in favor of Children's Orchid, that award was swiftly presented to her boss, Judge Swartz, for confirmation. Which he did. Diana Nazelli vs. Children's Orchid. Children's Orchid initiated the arbitration against Diana. After 2 years of briefs (so much for cost effective) The American Arbitration Association refused to hear Children's Orchid's claims determining they had no merit. Diana won, however, the amount awarded her was a wash. Although she won the dispute her arbitrator ordered that she pay all arbitration expenses, as well as, Children's Orchid's attorney fees. What happened to the loser pays all rule? Then there is Mark Rydell vs. Critter Control, another one of Ms. Barron's masterpieces. The case of Mike Yurik vs. The Coffee Beanery really takes an odd turn. Mike had to arbitrate twice, so much for binding and mandatory. I guess the contracting side was not happy with the first outcome. The second time the same arbitrator got the RIGHT decision, for The Coffee Beanery. Franchisees are at a high risk when it comes to arbitration. Since most of our savings were invested in the very business we depend upon to make a living, there is little money left for a legal battle, once we have been robbed. The loser pays all rule helps to ensure that most of us won't even follow through on the most obvious of contract breaches. We also stand a better chance of enforcement from the FTC and State Regulators by publicly exposing the abuse that is taking place within our Industry. Arbitration is veiled in secretcy and often requires a confidently agreement to be signed by both parties. I could go on. Let me know if you're interested. “The only thing that is absolutely clear is that franchise disputes will be more costly and more protracted if this legislation is enacted. Was this comment made from experience? There has been much speculation that the IFA is funding the legal fee's for The Coffee Beanery. If anyone has the right to ask the question, I feel that Richard and I have earned that right. Is the IFA funding the legal bills for The Coffee Beanery? I would also like to add that your attorney charges the same hourly rate to write briefs, file motions and show up to the dance regardless of whether or not you arbitration or litigation. Our tax dollars have already paid for the courts and Judges. Just the court reporter in our arbitration cost $36,000. In a court room this is provided. There is also a better chance for review and oversight. As for Binding Mandatory Arbitration, you would have to agree that giving people the option to arbitrate or litigate, would be the fair thing to do. After all, who would choose litigation, an expensive and time consuming way to settle a dispute, when arbitration would be the better route?

Children's Orchard, not Orchid by Guest

Submitted by Guest on Mon, 2009/06/01 - 09:05.

I think the writer is referring to "Children's Orchard," not "Orchid. http://www.unhappyfranchisee.com/childrens-orchard/

FORCED ARBITRATION by Guest

Submitted by Guest on Sat, 2009/06/06 - 00:39.

The Seventh Amendment hasn't been repealed. So how did Americans lose the right to trial by jury? In purchasing the modern world's necessities, from a credit card to a cell phone and even nursing home services, or accepting a new job, few Americans realize that they have signed away a crucial right. Tucked deep into lengthy contracts written in fine print is clauses dictating that any disagreements be resolved by arbitration, a judicial process in which an arbitrator issues a binding decision without ever having to make its reasoning public. An employee disputing poor working conditions or a nursing home resident alleging medical negligence might never know why their claims against a company were denied. Worse, since the arbitration firms have an interest in maintaining good relationships with the corporations that are their steady customers, it's little surprise that 98.4% of arbitration decisions by the top 10 arbitration firms are made in favor of companies--and against consumers, employees, and patients. The Arbitration Fairness Act, proposed this year in the United States Senate by Senator Russell Feingold (D-WI), protects against clandestine decision-making and corporate favoritism by invalidating pre-dispute BMA "agreements" between parties of unequal bargaining power. For safeguarding the right to trial by jury, where a body of law protects the rights of producer, consumer, employer, and employee alike.we must go up against the money and the power. Only when enough of us stand up and say no more and take back not only our rights but our lives and hold our elected officials accountable for bad legislation. Jordan Fogal jfogal281@aol.com www.jordan-fogal.com

Cite Needed by michael webster

Submitted by michael webster on Sat, 2009/06/06 - 07:15.

Jordan writes: "it's little surprise that 98.4% of arbitration decisions by the top 10 arbitration firms are made in favor of companies--and against consumers, employees, and patients."

You need to provide us with a cite for this claim.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Sunday, 7th June, is Mr BMM's birthday by RichardSolomon

Submitted by RichardSolomon on Sat, 2009/06/06 - 16:51.

Let's all wish him the kind of day he would wish for himself, instead of the kind of day he will probably have.

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

Courtesy to writers by Paul Steinberg

Submitted by Paul Steinberg on Sun, 2009/05/31 - 22:08.

Franchisee/Franchisor disputes need to be resolved in either an arbitral or judicial forum (unless the parties can resolve them in mediation).

Therefore, the issue raised by this article is whether mandatory arbitration clauses should be prohibited. If so, then the recourse is litigation.

That is the subject of the article.

Most of the comments have nothing to do with this subject matter, and are best addressed on other threads.

Just a thought...let's be courteous to the writer who took time to write this article, and not just ignore the article in order to vent on unrelated topics ;)

Paul Steinberg
Franchisee Attorney, New York City, Ph: 212-529-5400

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Good point, Paul by Guest

Submitted by Guest on Sun, 2009/05/31 - 22:27.

Suggest the bigger issue is that this group of seasoned state regulators, who spend most of their day regulating INVESTMENTS (not consumer contracts with dentists) are kind of taking the view that franchise agreements are INVESTMENT documents. Sad that I can buy $1,000 worth of stock and receive more protections and recourse from fraud than investing $100,000 in a franchise. The fact that the IFA is trying to group NASAA's stance into consumer level petty claims is interesting. Just like an ethical public company trying to maximize shareholder value - if you were a legitimate franchisor one would think that you would applaud any effort to remove the stigma created by rogue operators/competitors. Fraud and scams hurt everyone. I don't understand the macro logic of the IFA stance. Also, if the arbitration process is broken, why not fix it instead of throwing the whole thing out?

Re: Joan of Arc: You may find by Guest

Submitted by Guest on Sun, 2009/05/31 - 22:35.

How much recourse have the folks that invested in those protected stocks and bonds with AIG, Chrysler, Citi and GM you've mentioned had? Those silver-tongued securities brokers can say just about anything about their opinion of future prospects of the investments they are pitching with nary a care.

What is your point? by Guest

Submitted by Guest on Sun, 2009/05/31 - 22:59.

"How much recourse have the folks that invested in those protected stocks and bonds with AIG, Chrysler, Citi and GM you've mentioned had?" What is your point? The answer is PLENTY compared to the average investor in a franchise. Google pretty much any stock symbol and the word "class action" and you will see PLENTY of examples of cases where individual shareholders not being crammed down into arbitration. I'm not stating that all of these suits are valid - just that there is an avenue for the individual investor to seek relief. Are you stating that franchisees have equal levels of recourse? Using very complex, unique situations to counter my statement is a very slippery slope... Madoff, Enron, Worldcomm, etc. etc. etc. - Ponzi schemes. Bond fraud. We agree - what is happening to secure bond holders of GM, etc. should be a crime - but as Richard Nixon said...

Re: What is your point? by Guest

Submitted by Guest on Sun, 2009/05/31 - 23:12.

I think you slipped on you own slippery slope by comparing investing in securities to buying into a franchises.

My Point Exactly by Guest

Submitted by Guest on Mon, 2009/06/01 - 13:51.

If you don't see how the similarities far outweigh the differences when it comes to securities and franchise investments. And if you do not see the greater benefit of having a fair, balanced regulatory element to the franchise investment/due diligence process, then it is obvious what rules your world view and paradigm. No need fighting to prove that your version of the sky is red when I see blue. We will agree to disagree, I guess.

Re: My Point Exactly by Guest

Submitted by Guest on Mon, 2009/06/01 - 21:58.

There is little to compare between a franchise investment and securities.

I believe fraud is running rampant by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 22:43.

in all sectors of business. That is why our country is a mess.

Do - you've got to tone it down by Guest

Submitted by Guest on Sun, 2009/05/31 - 23:07.

From someone on your "side" - you've got to tone it down and stop communicating like a zealot/extremist. The media magnifies "news" 1000% - the "rampant fraud" that you are seeing is likely .00001% of the GDP. I'd venture to guess that 1 of every 50 franchisors are looking for the quick buck and are out to screw people. 2% certainly isn't "running rampant" - however, I agree that this example is useless to the person who just lost their life savings. But you must put the situation in context. Don't believe the hype. Your extremist, overreaching "feelings" expressions hurt the legitimacy of those professionals working to bring to light the real culprits who damage the reputation of a valid business model.

I'm with you Guest by Ray Borradale

Submitted by Ray Borradale on Mon, 2009/06/01 - 06:44.

except I'm not so sure of the 2%. If we are in guessing mode I would suggest that available Aus figures probably are in line with the US. I'll go for a 6.78% scam element? Then throw in a majority that we really don't know about. There is a lot of gray in franchising .... and some very good franchisors. And I do agree that franchiisng is a valid business model .. in the hands of the honest. Meanwhile - such figures represent an awful lot of people losing all if not a substantial part of what they acquired throughout a family's evolution.

Do; please don't get sucked into prolonged threads with morons who contribute nothing. Listen to this guest - he makes sense and you can tell he isn't one of the fools who is probably one fool deliberatley trying to screw any thread you comment on. He adds .. it doesn't.

The more things change; the more they stay the same.

RE: I'm with you Guest by Joan of Arc

Submitted by Joan of Arc on Mon, 2009/06/01 - 07:46.

Well Ray, as a "moron" you were referring to in your admonishment of Do for engaging in a prolonged thread with me I must say that you've been a bit hard on me for pointing out Do's reckless extremism and illogic. I feel sorry for Do and don't think her posting is benign it is harmful to her and to troubled franchisees. I am not a franchisor apologist. I abhor the Quizno's, Cuppy's, etc (the more than 2%)...of the franchising world. I think you owe me a kind and gracious apology!

Okay I will by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 23:26.

Thanks guest. I got carried away. The professionals are the ones that need to be discussing this.

too late? by Guest

Submitted by Guest on Mon, 2009/06/01 - 00:06.

The problem is the damage is done. You now stand revealed as zealot by your own admission and actions. It will be very hard for anyone to take your emotionally laden posts seriously in the future: you have become a ranter. I really do not have any idea how you undo the damage you have done by posting that zees can walk away from their contractual obligations, etc, etc, etc. Have you considered getting professional help? You really seem to have some major anger issues and I would guess that participation in this forum is preventing you from learning a constructive ways to cope with your obvious anger. You need to stop hating and get on with your life.

Did I say they can walk away from their contracts? by Barbara Jorgensen

Submitted by Barbara Jorgensen on Mon, 2009/06/01 - 01:15.

Never. I just asked a guestion. What came first the misrepresentations or the signature?

The only one that can deem a contract unenforceable is a judge or arbitrator after all the facts are put on the table.

Many zors who are in financial trouble are not able to pay their bills either. Are they able to walk away from their financial obligations? Some do by selling their assets to another company. Their assets are the zees. That is the result with doing business with rogue zors. It becomes a loose-loose situation.

Re: I believe fraud is running rampant by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 22:48.

When did it start? Was it happening 10, 20, 50, 100, 200 years ago? Why has no one told me about this fraud running rampant thing? There should be a law!

Now who is being silly? by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 22:57.

There has been many discussions on the news with experts giving their opinions. They were discussing the state of our country. One of the experts said word for word, " Fraud is running rampant in our country and that is why our country is in a mess."

As far as , "There should be a law!" There is laws against fraud.

Re: Now who is being silly? by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 23:03.

Who were these experts you speak about? Do you remember their names? What they were specifically talking about? Did they say when the great Rampant Fraud began?

Many zees are not business savvy when it comes to by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/05/30 - 22:16.

starting a business. Many people buy a franchise for support and guidance. After what we experienced I would never have bought a franchise because there was little guidance or support. Anyone can incorporate. All you need is aiitte money and a lawyer. Does that make you business savvy? No. It is another way for rogue zors to throw that in your face if you take them to litigation or arbitration.

It is amazing how they are very congenial before you sign. It is amazing they claim they gave you above the normal support after they know you are in trouble. (Just because they hired a marketer once.) Did the marketer sign up one member? Did the area directors sign one member? The answer is no. During pre-sales the one person to help us didn't sign one member.

If they disclosed the truth in the FDD it would say, "After you sign this agreement we will not help you at all. You are on your own period. We will not give you any business advice or guidance except offer you advertising for you to purchase. Do not do anything we say pretaining to the build out. Remember you are responsible for any decisions made and if you listen to any of our advice that is your fault. Remember we are businessmen and not advisors. If you fail it is because you did not follow our system."

Is this a business to business relationship? I believe it is opportunistic individuals taking advantage of unsavvy people period. And arbitration clauses are unconscionable. After much research I believe zees have a better chance in litigation than arbitration and the rogue zors know it . After a jury trial it becomes public information and arbitration is private.

Re: Many zees are not business savvy when it comes to by Guest

Submitted by Guest on Sat, 2009/05/30 - 22:25.

So we need arbitration to go away to save the unsavvy people from whom?

People need to be able to make a choice between by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/05/30 - 22:36.

arbitration or litigation. Most zees would choose litigation. My statements come from talking to many former zees not only in the franchise we were in but other former zees from other systems.

I doubt if arbitration will go away but as citizens that pay taxes we should of the choice.

Re: People need to be able to make a choice between by The Great One

Submitted by The Great One on Sat, 2009/05/30 - 22:41.

Franchisees have a choice now...don't sign a franchise agreement with an unfavorable arbitration clause.

I have news for you, arbitration clauses by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/05/30 - 22:46.

are in real estate contracts, employment agreements, doctor contracts, dentist contracts in everything. If I take your advice I would not be able to buy a house, get medical treatment, get a job. People should have the opportunity to make a choice between arbitration or litigation. It is unfair in all contracts.

a very tiny violin plays for you by Guest

Submitted by Guest on Sat, 2009/05/30 - 23:06.

People should also have the right not to hear your constant bitching about how unfair everything is in every single thread they read on BlueMauMau. Is there ever a thread you are not bitching and moaning about unfairness and expressing your feelings and your hurt. You are very annoying. Alex.

My blogging is strictly for those people looking for a good zor by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/05/30 - 23:34.

If I am annoying than do not read my comments. My blogging is not for you.

Behave yourself, please... by Joan of Arc

Submitted by Joan of Arc on Sat, 2009/05/30 - 23:42.

You are in a public forum and it is not your personal "blog". If you want your own blog then you should start one and wait for someone to show up to read it.

Go Joan by Joanguest greatone

Submitted by Joanguest greatone on Sun, 2009/05/31 - 02:14.

While Do ‘from time to time’ introduces the debate to the soon to be forgotten human trait of ‘feelings’ I prefer the anonymous guest without her resolve and resilience. While I accept that Do offers her insight and constructive criticism I prefer a pack of dogs on the chase that never contribute anything as opposed to her efforts to possibly help someone she will never meet. Or have I missed something in your constant threads? You don't have the spirit to ever understand - or care. You are the people that BMM warns about.

Soon to be forgotten human trait of "feelings." by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 03:02.

I hope I am gone when that happens. Without feelings how can one know what is right or wrong? How can one feel the good things about life. (Love, joy and happiness.) Is it all about the almighty $ and not people? I know people who have alot of money that are miserable. I also know people with alot of money that are extremely happy. I guess how things are today we are not suppose to expose feelings because it is unprofessional.

Joan of Arc? by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 00:25.

Very funny. I do not believe I have been misbehaving. I am telling it as it is.

If I was misbehaving I am sure Mr. BMM would tell me. The lawyers and experts have always corrected me.

I do believe the the lawyers and experts here want a fair playing field where franchising is safe for everyone. If they didn't, would the Cuppy's story not have been done in such an excellent way that everyone can see how all the victims got duped? It is journalism at it's best.

I believe journalism is headed in this direction. Newspapers are on their way out and many journalist are starting blog sites like this. I just saw a special where a successful lady in Washington D.C. has started a site like BMM where people can discuss the news. People are encouraged to blog their opinions. She has several reporters writing their stories and bloggers responding to the stories. This is exciting because people will be able to hear other people's opinions. The news is going to a higher level. Things have changed.

Re: I have news for you, arbitration clauses by Guest

Submitted by Guest on Sat, 2009/05/30 - 22:51.

Franchise agreements are not consumer agreements and we are talking about franchising.

Re: "Franchise agreements are not consumer agreements" by Howard R. Morrill

Submitted by Howard R. Morrill on Sun, 2009/05/31 - 11:21.

The analysis not that simple. In fact, the statement is largely incorrect.

Howard you are right, however by Guest

Submitted by Guest on Sun, 2009/05/31 - 12:04.

I am correct save for certain state laws, but the Arbitration Fairness Act is federal.

There is no Arbitration Fairness Act by RichardSolomon

Submitted by RichardSolomon on Sun, 2009/05/31 - 14:02.

and there is not likely to be one

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

Re: There is no Arbitration Fairness Act by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 15:03.

Thankfully so! As a practical matter if the Arbitration Fairness Act advocates have their way the courts will be even more clogged then they are now. I recommend franchisors approach drafting agreements with a thoughtful mediation provision to precede arbitration and/or litigation. With all Do respect to Do Diligence most of the time franchisees are the transgressors and franchisors (along with other franchisees) the aggrieved party. You might use "feelings" to justify transgressions by franchisees because they are just some regular old folks who were somehow "tricked" into violating their agreements because of circumstances. They are certainly bad franchisors like Quizno's and stupid ones like UPS/MBE, but I must point out franchising is bigger than the bad apples and very diverse. Do, I recommend you focus on more productive pursuits than "franchise watchdog" for which you are ill-suited and underwhelming.

Mediation by michael webster

Submitted by michael webster on Sun, 2009/05/31 - 15:46.

Joan of Arc writes"I recommend franchisors approach drafting agreements with a thoughtful mediation provision to precede arbitration and/or litigation."

Alright, I will bite: who do you recommend, and why, as a mediation services provide?

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Re: Mediation by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 15:59.

I do not have firsthand knowledge, but I have heard good things about Mediation Works Inc. www.mwi.org?

Mediation Works by michael webster

Submitted by michael webster on Sun, 2009/05/31 - 18:39.

I am a big fan of MWI, but that it is because my relationship with several people who work there. There are a number of mediation providers, all with different skill sets and philosophies.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

agree by Guest

Submitted by Guest on Sun, 2009/05/31 - 15:42.

+++++++++++++++ Do, I recommend you focus on more productive pursuits than "franchise watchdog" for which you are ill-suited and underwhelming. +++++++++++++++ Yep, but she won't. Stopping zors from HURTING zees and showing FAIRNESS and finding GOOD zors and identifying BAD zors and writing with EMOTION pretty much are the content of her posts. You could make a replica simply by inserting and of the above words which impart no knowledge into anything and make it a "Do" post. However I suspect that "Do" is really angling to make a career out of her victim status like those people who go on to build a career after their children are murdered or whatever. You know the type that write books after the death of a child or whatever or appear on talk shows. She could be wrong but I bet she sees some sort of $$$ flowing her way as the spokesperson for hurt zees everywhere.

Actually I strongly believe the spokeman by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:01.

for hurt zees sould be Deborah of the Coffee Beanery case. She was the head of a corporation and is one fighter. I respect she has talked to Congress. She is no dummy. She is very intelligent.

I don't have to be top dog. I love to work with the top dog.

I haven't thought that far by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 15:55.

but I love writing. It is interesting you bring up emotion.

When I heard a story on a conn man on Komo 4 he said when peope conn others they play on their emotions. "Be Your Own Boss," is a common saying of people conning others.

I love interviewing people and asking guestions about their experience in franchising. I have spent hours on the phone with different franchise victims. It is fasinating. Sad but similar.

Re: I haven't thought that far by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 16:06.

Do, the offers will be flooding in to you, I am certain. There may be a Reality TV Show as well! You will be in high demand for your firsthand experience and knowledge of franchisee failure. There aren't not enough empathetic failed franchisee souls in the world and you are at the pinnacle of your empatheticness!

There are plenty of empathetic zees out there hurting by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:17.

I assure you. Our government encourages blogging. When it comes to the safety of my fellow citizens I will continue to blog. (Financial safety.)

So where is your blog? by Guest

Submitted by Guest on Mon, 2009/06/01 - 23:19.

Responding on a forum or adding comments to an article on a web site is not 'blogging'. I hope your self-esteem is not hurt by your absence of basic intellect.

Where Her Blog Is by Darnelle White

Submitted by Darnelle White on Tue, 2009/06/02 - 00:22.

Guest, Besides her participation in forums and writing comments under blogs, Do Diligence has her own blog, here. I believe that you can see any web log page of a member by (1) clicking on "view blog" under one of their blog entries on the front page or (2) clicking on their name in any of their forum remarks or comments and then "click on view recent blog entries." One of my recent favorite is Do Diligence's blog entry CEO of Gold's Gym Is Gold. That blog has been referred repeatedly in other comments.

Re: There are plenty of empathetic zees out there hurting by Guest

Submitted by Guest on Sun, 2009/05/31 - 16:23.

I did not know that the US government encourages blogging!

That is where journalism is going by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:44.

It is exciting. I have personally e-mailed things to Obama. Did he get it? I doubt it because so many people have so much to say. I don't pick up a newspaper every morning. I pick up my lap top.

You are a true visionary. by Guest

Submitted by Guest on Mon, 2009/06/01 - 23:24.

Your ability to see things for what they are (and have been for the last 12-14 years) is beyond reproach. I'd like to get your thoughts on wireless computing and mobile phones as i think they too may have a future but i want to run it by you first. Start your own blog and they will come. They will surf in from Boston and Peoria and Los Angeles and Denver and everywhere, all with an eye for drinking the knowledge your so readily dispense.

My true vision by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/06/06 - 01:32.

is that people will be able to have a choice between arbitration or litigation.

In having a choice, this one reality will expose the rogue zors and the good zors can carry on with business and offer their good opportunities to people so they will prosper and not get duped.

It will force the rogue zors to do things right otherwise they will have no business. The very fact that litigation is public information is a important factor so people can see the zors who have many lawsuits therefore people will know to stay away from them. It will stop franchise abuse because the public will be able to make informed decisions when signing the franchise agreement.

The very fact arbitration is private is an advantage to the rouge zors who have mandatory arbitration clauses. The public has a right to know the truth because without knowing the truth about what is happening in all arbitration cases how can one make an informed decision about what hospital, doctor, employer, dentist or franchise has the most complaints from their patients, employer or franchise to do business with. It gives people transparency to make better choices. .

I for one would not buy a franchise when I see many lawsuits against a zor.

Re: My true vision by Guest

Submitted by Guest on Sat, 2009/06/06 - 01:42.

I for one would not buy a franchise when I see many lawsuits against a zor. ++++++++++++++++++++++++++++++++++++++++++++++++++++++ So do you have a documented record of success that illustrates why anyone should care about what you would or would not do? Or is this simply another example of being a legend in your own mind?

Stop goating me by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sat, 2009/06/06 - 02:04.

Do you have documented record of success that anyone whould care about what you say? Go jumb in a lake.

maybe you meant jump? by Guest

Submitted by Guest on Sat, 2009/06/06 - 12:45.

Go jumb in the lake. +++++++++++++++++++++++ That was a very mature response. The truth must hurt something awful. It was a legitimate question. You rant against GranvilleBean who is experienced and successful and suggest people discount his comments in favor of the world as you think it ought to be. You post about your own self induced failure. You term it a bad zor but my guess is if this zor did not lighten your purse something else would bad real estate, poor stock selection, or some other scam. There is a saying a fool and his money are soon parted.

Re: That is where journalism is going by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 16:49.

You really are that obtuse aren't you! You can not even carry on a conversation. Have you ever thought about contacting ACORN to see if they wanted to sponsor your franchisee activism? Could be big $$$!

Joan of Arc: You may find by Guest

Submitted by Guest on Sun, 2009/05/31 - 22:09.

Joan of Arc: You may find this interesting. I am a zee for disaster recovery franchise, we have a private section at our website for zees. Several threads exist about the various Internet franchise forums, BMM among them. One question that was raised and our zor have been open to is the desire to screen potential zees for the whine factor. What several of us are worried about is that a few unprepared zees could destroy the goodwill and resale value for the rest of us who understand how to run a business. These horror stories by people like Do are really the story about naive, unprepared, unsophisticated, and dare are say it unintelligent people who wanted to own a business and got burnt. I see a day when zors do not even offer the chance for someone like Do to become a business owner simply because they have far more to lose taking on a whining personality then the do only offering the businesses to well heeled, educated, experienced business people. Yet another possible example of the law of unintended consequences. Good zors wont' want to risk dealing with a Do Diligence type. OzoneMan

Re: Joan of Arc: You may find by Guest

Submitted by Guest on Sun, 2009/05/31 - 22:24.

I am not surprised, but the question is DO surprised?

A successful franchise lawyer told me he could only by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 22:18.

recommend 10 good franchises. That is really bad.

Back to the thread. I do believe that people should have a choice between arbitration or litigation.

There are good zors out there by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 17:25.

Very few have posted. I have learned there are certain things good zors do that confirm they are going into a partnership with a future zee. I hope to see the day that people will share their success stories and the rogue zors will just dissappear from the face of the earth.

When obvious misrepresentations are factual before by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:19.

you sign it becomes a violation of several state and federal laws. I have creditability from living the experience. When one believes they were lied to and given earnings claims then one should not just sit there and take it.

Zees as trangressors, I do not believe it. You believe that most zees who have been taken are at fault? Like Howard says there are no laws that says that the buyer has to believe that the zor is lying. There are laws that say the seller is not to misrepresent. Misrepresenting is against the law. It is business in bad faith from the get go.

Re: When obvious misrepresentations are factual before by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 16:26.

So, you do not think that franchisees transgress franchisors by violating their franchise agreements?

You have to go to the beginning, why the zee signed the by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:37.

agreement. Were there fruadulent enducements in getting the zee to sign? In most cases they are. People are not easily parted with a huge amount of money unless there were earnings claims and misrepresentations. It is illogical to think otherwise. If this can be proven and a judge or arbitrator decides that there was indeed misrepresentations and false earning claims then the judge or arbitrator can deem a franchise agreement unenforceable.

In commom law contracts any misrepresentations, puffery or if a person signs and they are not of sound mind the contract can be deemed unenforceable.

Re: You have to go to the beginning, why the zee signed the by Guest

Submitted by Guest on Sun, 2009/05/31 - 16:45.

Speculation and generalizations! I'll ask my question once again...so, you do not think that franchisees transgress franchisors by violating their franchise agreements?

Speculation and generalizations! by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 17:50.

Bull___!!! There are facts. Start up cost is one of them. This is where zees get hurt. When an FDD says start up cost is a third of the actual start up cost and there is evidence with the first zees who got screwed from the word estimate and they do have experience with current knowledge. Why was the true start up in the 2nd UFOC still a third of the actual start up cost? That is only one material fact among many others..

Re: Speculation and generalizations! by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 17:55.

So, I guess if a franchisees' actual cost is greater than the range in Item 7 then they have the implicit right to violate the franchise agreement?

In my beliefs by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 16:58.

if a zee is fraudulantly enduced in signing the agreement there is no agreement. Until a judge decides there was indeed no misrepresentations before signing. The zor violated statues by misrepresentations in their advertising all over their web site. Among many other violations. I do not believe the zee who was lied to and there is solid evidence that they believe they are in violations of the contract. The zee was violated first. If judges do not see the obivious violations especially when 99% of the zees went bankrupt I see no hope for our judicial system.

Re: In my beliefs by Guest

Submitted by Guest on Sun, 2009/05/31 - 17:01.

What? You post makes no sense!

It is simple, which came first the misrepresentations by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 17:03.

or the signature? It is obivious the misrepresentations.

Re: It is simple, which came first the misrepresentations by Guest

Submitted by Guest on Sun, 2009/05/31 - 17:26.

Again you make no sense? Are you saying that if a franchisee believes they were misled in some way that can violate their franchise agreement? Some kind of "Human Law" pass or social justice "get out of jail free card" where we throw the "Rule of Law" out the window? What happens if the franchisee that believes they were defrauded is wrong and they were not defrauded?

Are you saying zors have a free ticket by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 17:33.

to fradulently enduce their victims in signing the agreement?

Re: Are you saying zors have a free ticket by Guest

Submitted by Guest on Sun, 2009/05/31 - 17:36.

Can you try to follow a reasonable discussion path and answer my thoughtful preceding post?

Misrepresentations come by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 17:48.

before the signature period.

So what! Because a by Guest

Submitted by Guest on Sun, 2009/05/31 - 17:57.

So what! Because a franchisee believes they were defrauded do their obligations under the franchise agreement evaporate?

That is why we have lawyers, litigation and arbitration by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 18:03.

Misrepresentations can deem a contract unenforceable. Misrepresentations are serious. Fraudulently enducing a person into signing an agreement is very serious.

A Contract is a Contract by michael webster

Submitted by michael webster on Sun, 2009/05/31 - 18:42.

Do, this is a silly line of reasoning. You cannot simply tell people to avoid their legal obligations because they might have been misled, even if they were misled.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Michael if a zee is left with nothing by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 19:04.

and I believe from talking to many hurt zees, how are they going to pay anything? The rogue zors count on their marks not to have money so they will not sue them. Many are left eating very little and doing without heat in cold weather or can't even live anymore. If there is no money how can they live up to anything when they can't pay for their daily living expenses?

Do be careful by Ray Borradale

Submitted by Ray Borradale on Sun, 2009/05/31 - 19:28.

Franchisees in trouble can make decisions that increase their problems. They need expert advice and/or they should consider ALL the implications of giving credibility to any part of the zor's arguement. It is bloody dangerous and Courts will find against a breach of contract where the zor can fund an action.

If the zees have no money [at all] then they should get advise about going into bankrupcty and negating any action against them. Such advice in Aus is free and I would suspect it is in the US as well? If it really cannot be made worse then OK. But if a legitimate breach for non-payment [or anything else] can make it worse it will make it worse.

The more things change; the more they stay the same.

RE: Michael if a zee is left with nothing by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 19:22.

Your absolute knowledge of the general predicament of all troubled franchisees is reckless and foolish. You simply cannot know this information based on your anecdotal spurious research!

I have talked to zees from different rogue zor systems by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 19:26.

the stories are very sad and true.

Re: I have talked to zees from different rogue zor systems by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 19:43.

Do - Is it possible that one of those franchisees you spoke with could have exaggerated or lied to you? Can you even fathom that a franchisee could be wrong and deceitful or are those possibilities reserved only for franchisors?

What Do Dil Is: by Granville_Bean

Submitted by Granville_Bean on Sun, 2009/05/31 - 20:33.

Joan of Arc, Do Dil is a silly, naive and credulous person who was (alledgedly) led down the rosy path and was ahocked, shocked I tell you, to find out that there are actually people who would take her money! Oh my, lions & tigers & bears, oh my! She is now a professional victim and one trick pony whose entire world is Bad Zor, Bad Zor. She's an attention seeker, but she'll try to tell you it is all for others with never a thought for herself. Isn't it funny how she only has interest in Hurtful Rogue Zors and Failed Zees, and not a thing to say about actually running a successful business?

Beany by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 21:38.

We were having a debate period. I am not silly or naive. At the time in early 2006 Quiznos was number 3 on the charts as good franchises. Please allow me to write the way I write. On my lions & tiger & bears, oh my ,I was making fun of Q. I believe it went like subs, fitness and burgers, oh my! What is next morturaries? Express embalming or getting toasted.?

Isn't it funny how you love to make fun of people who have been hurt. Hopefully Beany you will never get hurt. I don't think you could handle it.

No one is exempt from getting hurt weather it be financially, physically. or emotionally.

I have been studying the world of franchising because I really want to know the difference between good zors and bad zors.

And yes Beany turning and churning is a harsh reality in the world of franchising. People are getting educated about it and hopefully people will not allow this hideous reality anymore either by joining an assoication or listening to people who have lived it. Many of our franchise already knew about turning and churning. Today 123 Fit LLC is non-existant.

A corporation who buys failed franchise systems bought it. It is my understanding there were 21 franchise agreements sold to this corporation. It is my hope that the remaining 123 Fit clubs will survive. Only time will tell.

The one's I talked to I doubt very seriously if they were by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 19:59.

exaggerating or lying. I know I am not.

I have been living the aftermath of franchise fraud.

I don't believe a person would sign a franchise agreement without any proof of success. I do believe in our case they were just waiting for us to go out. They knew how much money we had and they got it right away. That is why I will never share how much money I have with any person in business or otherwise. That is another mistake many zees make.

Proof of success? by Guest

Submitted by Guest on Mon, 2009/06/01 - 23:36.

What was your 'proof' of success that you had in your hands prior to signing your FA? Was it that they told you your unit would do well? As someone who also lost a boatload in a failed franchise operation, I can honestly tell you you need to shut the hell up as you're making us all look like morons.

Re: The one's I talked to I doubt very seriously if they were by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 20:04.

I'm sure it was the franchisor's long term plan for you to fail as quickly as possible causing you to run through your money. It makes great business sense for the franchisor does it not to ensure that their royalty income discontinue? You are blind and cannot see the fallacy of what you preach!

Joan Joan Joan by Ray Borradale

Submitted by Ray Borradale on Sun, 2009/05/31 - 20:18.

wake up. There are very few people left on this planet that doesn't accept that 'churning' exists. You deliberatley choose to spew the rediculous in an attempt to annoy readers - you have been successful and you are what BMM warns about. Do - why do you bother with this twit? Ignore it and it will go away - eventually.

The more things change; the more they stay the same.

Re: That is why we have lawyers, litigation and arbitration by Joan of Arc

Submitted by Joan of Arc on Sun, 2009/05/31 - 18:13.

Ms. Do, you really need to stop your foolishness! You have little idea what you are talking about and if some franchisee were to follow your logic or God forbid advice they would end up in a worse mess then they may already be in. I believe you are well intended, however no matter how empathetic and passionate you think you are, you could Do some real damage to the very folks you proclaim to want to protect. You obviously have not come to terms with your franchise failure and really need to work on it until you find peace with yourself.

The hurt zees cannot be harmed anymore than they are by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 18:58.

The rogue zors don't care if they have hurt their victims. People have lost homes their ability to be self sufficient and are in a state of absolute apathy. The only thing else left is the victims will sent up a place for homeless hurt zees. Many have worked in corporate America made good money in their life time to be left in a state of depression, poverty and apathy. This a disgrace to the integrity of our country. Good citizens who never hurt anyone and worked all their lives. They can't be hurt anymore. They are messing with people's lives and this is tragic. The predators need to be punished for their wrong doing. I pray the governments of our world will wake up to the reality of rogue zors.

There is a difference between franchise failure by Barbara Jorgensen

Submitted by Barbara Jorgensen on Sun, 2009/05/31 - 18:27.

and being intentionally led to failure. Read the article about the difference between a franchisor and robbers. (Another word is being a mark.)

Howard is right by RichardSolomon

Submitted by RichardSolomon on Sun, 2009/05/31 - 11:54.

Whether a franchise agreement is - in contemplation of law - a consumer agreement varies from state to state.

For example, the Michigan Consumer Protection Act (an oxymoron) does not cover franchises on the grounds that the sdale of a franchise is not a consumer transaction.

The Texas Deceptive Trade Practices ACt (the Texas Cosumer Protection statute) does apply to franchise sales and specifically provides that a sale of a franchise in violation of the FTC Franchise Rule is evidence of a DTPA violation.

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

Tell me when to be surprised by Ray Borradale

Submitted by Ray Borradale on Sat, 2009/05/30 - 19:53.

‘French argues that when it comes to arbitration clauses that have been signed in franchise contracts before any dispute arises, there's a difference. Franchise agreements are signed knowingly by two business entities.' - French_ IFA.

‘The only thing that is absolutely clear is that franchise disputes will be more costly and more protracted if this legislation is enacted.' - French_ IFA.

The more things change; the more they stay the same.

State Securities Administrators Oppose Forced Arbitration in Franchise Agreements

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