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Grad Student Asks About Failure Rates
Dear Franny,
I am a grad student and I am doing research on "Failure Rate of Franchised Versus Non-Franchised Restaurants".
I'd really appreciate any sources, numbers or information relating to this subject. I am trying to use some general news databases (ABT/Inform; Factiva, Lexis/Nexis), but I am having difficulty finding specifics about this subject.
Thank you for your help.
Radu
- forums:
Less risk as franchisee
Another one from the Manitoba Law Review Commission: A significant attraction of the franchise arrangement for the franchisee, particularly for the first time business owner, is the opportunity to enter the marketplace without assuming the degree of risk usually associated with startup enterprises. Click here to see report (pdf).Flawed Research ---Target Research -------INTUIT-ITTF
Good Luck! You may find references to failure rates and articles by Business Reporters who earn their living by hyping investment in small business, etc.. who may even talk about restaurant failure, you won't find anything difinitive. It is human nature not to bite the hand that feeds you. As a graduate student, I hope you find this suspicious and will think about whether there is an intentional obscuring of the failure rate of franchised restaurants to support the public policy that supports franchising because it is good for the economy and provides jobs that are not otherwise available in our economy. Only first-generation franchisees who provide the labor and capital to get a brand restaurant started LOSE when their brand-name restaurant fails. It is not a failure for the franchisor if the brand-name restaurant continues to operate under new ownership and continues to pay royalties to the corporate franchisor. The second-generation franchising often can get a ROI because of extremely low investment costs because of "fire sale" of original franchisee's assets. While the first-generation franchised restaurant may fail, this doesn't turn up as a failure for the franchisor when the business, either through a transfer, or an acquisition by the franchisor, continues to operate under the Brand Name. Generally, most of the transfers are business failures and generally most of the acquisitions upon termination are business failures. But these franchisee failures translate to success rates for the franchisor. Studies done by INTUIT and Institute for the Future indicate that the corportate jobs and many of the traditional life-long jobs that were around in the first three quarters of the 20th century are gone ----and gone for good. The Global economy will mean that Americans will have to look to "small business" opportunities to support themselves. Government has to be concerned about where the new jobs in the economy will be produced, and franchising provides jobs. It follows, therefore, that government cooperates with the franchising industry to hide the true and actual failure rate of first-generation franchisees to keep the home fires burning and producing jobs. These first-generation franchisees are for the most part silenced in their failure. Those who get to court are a very small percentage of those who have lost everything. While it is an ideal and a myth of our democracy that the "individual" counts in a democracy, the "individual franchisee" is expendable under franchising and the law surrounding franchising. When the values of capitalism and the values of democracy clash, the values of capitalism are supported by public policy and the status quo. When there is no "nationalism" in "capitalism" and the global economy becomes the marketplace of supply and demand, it is obvious that some Americans will get much richer but a whole lot of Americans will get much poorer to support the goals of the global economy and global capitalism.Success rates
Try this POSTING with links to other success rate claimsFranchise Failure Project
If you are serious about this, give me an email, your thesis supervisor's name, and a short academic resume. If this is a thesis topic, or even major paper, you have an opportunity to shine. None of the cited academic papers had access to Caleasi. Without that access, the conclusions are too general to be of academic interest.Michael Webster PhD LLB
Misleading Advertising Law
FAILURE RATES
The industry has been putting out the pap for decades that franchised businesses are more successful than independents and that franchising, since it represents about one third of all sales of goods and services in the United Stated, has demonstrated itself to be the superior way to operate. Failure rate comparisons between franchised businesses and independents do not support this propaganda.Mr. Toby Tatum manages the Business Acquisition and Sales Division of Prudential Clement Realty, Inc., in Northern Nevada. He has an MBA degree, is a certified business counselor and business appraiser, as well as a multiple unit franchise owner for many years. In his interview, published in the November, 1997 issue of Pratt's 'Business Valuation Update', some very interesting and usually buried information was revealed.
Much of the failure rate information bandied about is confusing at best because of the definition of 'failure' used. Illustratively, a franchise location in which five owners have lost their entire investment capital is not counted as a 'failure' because it still exists. Statistics published by the International Franchise Association about the success profile of franchised versus non-franchised businesses are being called into serious question by very respected researchers. Dr. Timothy Bates, economics professor at Wayne State University in Detroit did a study of 7,300 small businesses in the mid 80s, the hay day of franchising, including 400 franchised businesses. Roughly 35% of the franchised businesses went out of business, compared with 28 & of the non-franchised businesses. He found a 46% failure rate among franchised businesses compared to a 23.6% failure rate among non-franchised businesses. The Bischoff & Puckett 'Guide to Buying and Selling a Business' (January, 1996) found that only 65% of franchise locations were still in business, operated by the same owner at the end of four years. The American Association of Franchisees and Dealers found that 69% of the franchisors listed in Entrepreneur magazine's Franchise 500 in 1987 no longer existed in 1992. Mr. Tatum pertinently asked what must have been the mortality rate among the franchisees of those companies. (Shannon Pratt's Business Valuation Update may be reached at shannonp@transport.com.) Perhaps now it becomes clear that the $150,000 'franchise kit' approach, with no credible feasibility analysis has, in our opinion, contributed mightily to the frequent failure and stalling out of new and emerging franchisors.
Richard Solomon
www.FranchiseRemedies.com
Franchised vs. Non Franchised Restaurants
Radu:
Thanks for you question, and for visiting BlueMaumau.
It's a great question, and it's one that I'm not surprised that you're having a challenging time finding specifics. Neither at the top of my head, nor at the tips of my fingers do I have a hard-fast answer. But hopefully we can get you pointed in the direction of discovering the FACTS ON FOOD!
First, if you haven't already done so, I think you will need to break your restaurants out into specific segments and sub segments:
There are four commercial restaurant segments:
Restaurant categories are also segmented by chain type:
I would then contact the National Restaurant Association:
You'll also find some great stats on their website www.restaurant.org and be sure to watch their recent press conference, to hear one of the best industry statisticians speak on the subject.
After you dig up all that you can from the them, I'd try to contact Darrell Johnson at Frandata, and explain what it is that you're doing and why you're doing it and see what information that they can and will provide to you.
There's also some regulars here at Bluemaumau who have tons of experience in both Franchising and Restaurants who might chime into our discussion, and share any information that they have. In the mean time I'll do some digging of my own and see what I can come up with. Keep your eye on this disccussion thread, and when you're research is finished please share it with all of us here at Bluemaumau.
FranTastic Franchising!
Franny!
Franchised vs. Non-Franchised Restaurants
Dear Grad Student
You are in luck. A lot of your work has been done. See E. Hachemi Aliouche and Udo Schlentrich, "Does Franchising Create Value? An Analysis of the Financial Performance of US Public Restaurant Firms" fromthe William Rosenburg International Center of Franchising at the University of New Hampshire published within the past year. See also Nevin Sanli and Barry Kurtz, "Appraisal of franchises Requires the Use of Unique Valuation Procedures" Franchise Law Journal, Vol. 26, Number 2, Fall 2006 p.67
Bruce S. Schaeffer
Franchise Valuations, Ltd.
www.franchisevaluation.com
RADU "It's the Milkshake Stupid!"
RADU:
Bruce was kind enough to recommend two sources. After reviewing both I believe they do a fairly decent job in showing valuation differences between a Franchise & Non Franchise concept. However I do not believe either really answer your primary area of research, IF you are looking at it as I understood your question from the FRANCHISEE perspective. IF however, you're looking at it from the FRANCHISOR perspective they may be very applicable.
The First one: "Does Franchising Create Value? An Analysis of the Financial Performance of US Public Restaurant Firms" Compares Large Public Franchised Chains vs. Large Public Non-Franchised Chains. It gives franchising a slight edge overall, but I do not believe think that is what you were looking for. Furthermore, it incorporates data from two sources which may be less than objective.
If I understood your question correctly, you're looking for the success:failure rate between a single unit owned by a franchisee vs. a 'mom & pop' eatery.
The second source referenced by Bruce: "Appraisal of franchises Requires the Use of Unique Valuation Procedures" as previously stated also does a good job in selling the value of a franchise unit, yet does not address the single franchised unit success & failure rate to the single unit "Mom & Pop".
It has also been brought to my attention that I failed to mention a resource here in the BlueMauMau franchipedia titled "What is the Success Rate of a Franchise vs. an Independent?". This particular resource provides some very good data, however I would view much of it as Franchise Propaganda, it should also be noted that this information is not "BlueMauMau" data, but rather information contributed by BlueMauMau members. Much of this data is now obsolete, even if it was accurate at the time that it was originally generated, which is why I'll once again ask that you PLEASE share the results of your final research with all of us here at BlueMauMau!
You may find Why Restaurants Fail from Cornell University to be helpful, although it's a comaprarison of independent vs. chain instead of independent vs franchise. If for no other reason it's worth reading: "IT'S THE MILK SHAKE STUPID!" (PG. 10). I'll continue to dig, so keep checking back!
FranTastic Franchising
Franny
Dear Grad Student beware posts the Z - Guest
Z-Guest lost his butt on his investment in a UPS Store franchise. He claims that there is a conspiracy between a bunch of parties to deceive franchise buyers the evil-doers are SBA Registry/FranData/Fran/Vet/VA/AARP/IFA/AAFD. I'm not suggesting you ignore Z! If you base your thesis on his rants however you run the risk of working the counter in one of these franchises instead of your targeted vocation. Unless of course your thesis is supposed to be a kind of Pink Panther meets Gilligan's Island type of treatise.Perhaps a definition of Success might help
Radu,
By now you have probably realized that you have stirred up a bit of a hornets nest. It's not a new question and has been debated on this site often in one form or another. If you were to search on this site under "churning" you will read threads talking about failure definitions.
There are some franchise industry veterans who regularly post on this site and give very good insights, I haven't yet seen them agree on a failure definition.
Perhaps you should turn the question around and ask about success rates? Many of the people posting here make a living by advising new franchisees and I presume that at some stage once having agreed on a franchise system they define some sort of end result.
Dale of Fransynergy tends to be one of the more positively inclined writers - maybe he can define success. We can then in turn count everything else as failure.
I hope you post your reasearch here for us when it's finished
PizzaGuy
UNH "academic" studies
As a threshold issue, I think that you need to define "success" and "failure" and then come up with an empirically-valid metric(s). That's not as simple as you might think. I've given this a lot of thought over the years, and am still flummoxed so if you have a breakthrough, please do post it!We have discussed the UNH study before on this board, as well as failure rates . As with any study, one should consider who pays the piper. Initial funding for UNH came from Rosenberg (of Dunkin' fame) with Matt Shay of the IFA and the esteemed Jim Amos advising UNH. That should tell you something.
UNH took a good concept--serious academic study of a major economic sector-- but turned itself into a not-so-subtle PR firm for the franchise industry, and that is a shame. Most noted for the "Rosenberg Index " and the facially absurd suggestion that the Index was useful to potential franchisees, the folks at UNH have now come out with a study as to whether franchising "creates" more value.
Look at the study, and you will see the amazing fact disclosed that f'zors have higher returns on capital!!! That is positively astounding, and indicative of the high academic standards of UNH.
Um... wait a minute.
Isn't the whole purpose of franchising to use someone else's money? By definition, if I am getting someone else to build my restaurant, buy the equipment, pay the employees, pay the rent, pay the taxes, remodel as necessary... well, my return on capital is quite a bit higher than if I actually had to borrow that money and pay my own bills. Done right, one could have ROI approaching infinity.
Look, franchising is a method of purchasing capital and labor. Period.
And...There is nothing wrong with that. I have never understood why the franchise industry is so embarrassed by this fact.
Franchising can be mutually beneficial for both franchisor and franchisee, and I have many satisfied franchisees as clients. This isn't the "Holy Grail" or a "partnership" or a "family" or the "American Dream". It is business, pure and simple. This romanticizing is not only unwarranted, it is counterproductive when f'zees finally come to their senses and realize that they are in business, not a "family" or other such idiocy.
And I have nothing against any industry (franchising included) putting out "studies" which show how wonderful the industry is.
But... there is something really distasteful about an academic institution which so blatantly violates fundamental academic principles such as neutrality and substantive intellectual inquiry. Not to mention common sense. In fairness, this is not confined to UNH; see the bottom of the page where I previously posted on "Conflation: Apples & Oranges" (link doesn't quite work, click and go to Page 2, and scroll to second comment from bottom of page: Mr. MauMau, can we fix the deep links?) discussing the Kanbay Study .
I am a big fan of Bruce's work (a paying subscriber, no less!) but he's off base on this one and I doubt he would even think of putting out such shoddy work as UNH.
PAUL...here you go.
a href=THE LINK>THE WORDS TO BE DISPLAYED PLACE < before and /a> after the above. would be 1a href="the link"2THE WORDS TO BE DISPLAYED1/a if 1=< and 2=>Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Researching the Researchers and their Sponsors
It sppears obvious that research is conducted to make franchisors and their franchised concepts look better than they actually are when compared to just starting "a business of your own." While this is a kind of "constructive fraud" on the public, because this is false information, they have been getting away with it for years. Getting away with it because the franchisee failure rate is obscured from view in the transfer columns of the UFOC's and the research doesn't concern itself with franchisee failure. Franchisees are expendable and silenced in failure and don't appear in research on franchising. Our Canadian cousins even put this faulty information out as government information. How unfortunate for Canadian prospective franchisees. But, our government does the same thing through the IFA.Franchise vs Independent Success Rates
A good link - in many ways. Just want to remind the community to please submit any studies on franchise versus independent success rates if you do not see them in the franchipedia. (The Bates study is there.)Almost all franchise sub shop ventures are failures
All the successful Quizno's sub shop owners are on public assistance and without their stipend from the state they couldn't afford to eat in their own restaurant. In fact many Quizno's franchisees work a second job at The UPS Store to pay for their children's daycare. Coincidently UPS Store franchisees also have second jobs at Quizno's. I can't verify it, but I have heard rumors that both Quizno's and UPS Store franchisees have built tidy little Jani King enterprises that specialize in cleaning Sona Medspas. P.S. The Jamacian Quizno's franchisees also drive gypsy cabs in NYC.Truth is out There with a Business Coach --Failure Rate
Thanks for this Posting of the truth in BIG PRINT ===== The truth is powerful and has a way of surfacing! How can the regulators justify allowing the franchisors to obscure the failure rate of their business plans in the UFOC's? Why isn't franchising regulated at least as well as securities are regulated?Failure Rates in Large Franchise Networks
When large and visible networks use turnover in the transfer columns in the UFOC's to disguise the large number of discounted stores that compose their networks, they obscure the risk factor of the business plan and mislead new prospects who mistake the visibility of the network as an indication of the viability of the business plan. The first generation franchisees who have provided the capital and the labor to get the units started are still paying on debts or are in bankruptcy when that second-generation franchisee takes over the unit at just pennies on the dollar to continue the march to breakeven. The first-generation franchisee's assets continue in the service of the franchisor's profits while the failed franchisee continues to service the debt and/or is forced into bankruptcy and silence. The second-generation franchisee has the opportunity over the next two or three years to bring the unit to break even and make a ROI because he got the unit for nothing. The Franchisor continues his uninterrupted collection of royalties and fees and counts this unit as a succe3ss. The Franchnisors premeditate the use of the terms of the franchise agreements to abet these third party acquisitions that so obviously protect their interests and bottom lines. The franchisisors have no cash outlay and no due diligence concerns and they acquire general releases and confidentiality agreements as a condition of their approval of the transfer and the fire sale of the assets to the third-party buyer. While UPS started to sell its flawed business plan "The UPS Store" to the public in 2003 under the guise that it was an unprecedented franchise opportunity, etc.. the President of MBE-UPS was out on the Internet by 2005 pushing the sale of discounted stores (hobbled stores) to third-party entrepreneurs. In these Internet interviews, they likened buying a "used" store to buying a "used house" instead of a new house ---a disingenuous comparison because, of course, the assets of the first generation franchisee can be acquired for almost nothing either from the bank, upon default of the loan, or from thefranchisee,him/herself who is trying to reduce the total debt that will be due to creditors by getting out from under the personal guarantee on the lease and the franchise itself. Third parties who get these units in "distress sales" do not assume the debts of the distressed parties, as one assumes the loan on a used house. These third parties generally sub-lease from the franchisee for the balance of the original term of the lease and have reduced their actual risk in the investment to the lowest possible dollar amount. While all of this is perfectly legal, and "never an ill wind blows that doesn't blow somebody some good" it is the premeditation of this squeeze in the franchise agreement and the disclosure of "termination terms" in the franchise agreement that are never used by the franchisors that misleads and disguises the real risk of the investment for the first-generation franchisee. This, together, with the DEAL with the FTC to obscure the failure of first-generation franchisees in the UFOC Item 20 columns results in bad faith practices that disguises the real risk of investment in the franchise from first-generation franchisees. The FTC and state regulators cannot know to what extent the transfer columns are reflecting th4e failure rate of first-generation franchisees who lose their entire investment. It follows that they do not want to know and that Item 20 was a compromise that would permit government from knowing the actual failure rate of the business plans that they pretend to regulate in the interests of the public. Shouldn't we expect more from our government? Would the UPS and the Quiznos scandals be possible if the government effectively regulated franchised business opportunities ----at least as well as securities are regulated by the SEC?It's Luck -- ask any failure!
First let me say thanks PizzaGuy for the Positive remarks.
Second, let me point out to all who have not yet noticed this is a post from March - that somehow got brought back to life. This one Post to Dear Franny is the only post which Radu ever posted.
My standard definitions of 'Success' is:
"The gradual realization of predetermined worth while goals."
and sometimes when I'm a feeling really spunky I'll use: "Being able to do what you want, when you want, with who you want, wherever you want - regardless of Time or Money".
As for this particular topic 'Success' is much harder to define as an Anonym to Failure. But it would include:
A short clear concise definition of Business Success is really a VERY GOOD QUESTION:
"To enjoy doing what you do, and making a profit doing it"
or I'm back to where I started:
"The gradual realization of predetermined worth while goals"
This later definition covers the phases, requires thought & planning. Here's a few of my favorite quotes on SUCCESS:
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Success Rates
You can be sure, PizzaGuy, that if the transfer columns of the UFOC's reflected more success than failure, the franchisors would have those statistics out there in full view of the public. We still have no explanation from anyone as to why the FTC thought it was necessary for franchisors to indicate the reasons for "terminations" that are so obviously failures but didn't think that "transfers" that hide first-generation fire-sale failures to third parties needed an explanation. Success is when you make money on an investment and failure is when you lose money on an investment but this is a terrible problem for the "brains" on this site who just want to blur the issue of hiding failures of first-generation franchisees in the transfer columns of Item 20 of the UFOC. Radu, our graduate student, probably finds this discussion interesting and I hope he is also a student of political science.Paul gets it right! Kanbay Study and UPS Churning
Paul always tells it like it is! The Kanbay study tells us how smart franchisors can use someone else's capital and labor to increase their profits, and, of course, Paul explains that MBE-UPS are in business to make profits for themselves on someone else's capital and labor and we shouldn't be surprised. Not being an Attorney, I assume that "churning" is legal under the law and the government regulation of franchising. There has been no information to the contrary on Blue Mau Mau or on Google Search. While it may appear to be "fraud" to first generation franchisees who are just fodder for a churning franchisor, this is not a fradulent practice? Franchisors are allowed to build visibility that looks like viability of the business plan on the backs of their new and unsuspecting franchisees. In The Rose Line Commentary on this site, JM, I believe, indicates that churning is perhaps a fundamental and an SOP of franchising and this is perhaps how small networks become big and then bigger. But if it is true as some of the experts have indicated that only one third of franchisees make profits, one third break even, and one third fail, the FAILURE RATE OF THE FRANCHISED BUSINESS PLAN should be disclosed to the franchisee under law ----and it isn't. While Paul and the others will indicate that the statistics are there in Item 20 on which to do the math, Quiznos and UPS made it into the Top 5 in AARP and Entrepreneur and are still selling new franchises to new prospects who will build new stores for them. This has to be malicious.Manitoba Report link
Okay, you learn something new everyday, even if it is a techie trick that I will likely never be able to repeat...here goes Manitoba Report If you ask me, the Idiot Boxes at the bottom were much easier. Dale: You and Frankman may not be my heroes, but Sergey Brin would have a great time conversing in NerdSpeak with you two.Send them a letter
They are seeking comments: Manitoba Law Reform Commission 432 – 405 Broadway Winnipeg, MB R3C 3L6 lawreform@gov.mb.ca Tel: (204) 945-2896 Fax: (204) 948-2184 Website: www.gov.mb.ca/justice/mlrc Deadline is JULY 31, 2007Research Failure Rates
Good article here on small businees failures from 2004. I like the quote by the Professor of Economics at Dartmouth 'How do you define failure?' http://www.usatoday.com/money/smallbusiness/columnist/abrams/2004-05-06-success_x.htmJamaciaMeLaugh
JamaciaMeLaugh! Perhaps you should start a special non-profit organization for current and past franchisees, something similiar to The Actors Fund. You can solicit, collect and manage the funds and dispurse assistance to franchisees and ex-franchisees as needed. You'll also be able to collect a handsome salary for your administrative responsibilities. You could even start a special nursing home like the Lillian Booth Actors Home. Of course you may want to allocate a percentage of the funds collected to lobby for more regulation. Heck you may even give the Actors fund some pointers. After all everyone knows that most fail, they never make any money etc... Perhaps they could get the government to regulate acting! YOUR MISSION STATEMENT: The Franchisee Fund is a nationwide human services organization that helps all franchisees from all franchise concepts. The Fund is a safety net, providing programs and services for those who are in need, crisis or transition. There's probably even a way that you could franchcise the concept and have local chapters all across the country. Perhaps all operating franchisees could contribute a 1% royalty to the fund, in turn they'd receive a gauranteed spot in the nursing home when they ultimately lose their home. Contact Millionaire Richard Quick - I'm sure his philanthropic side would kick in and he'd provide some start-up capital in exchange for a high paying position on the board of directors.Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Was Entrepreneur Magazine misled by the visibility of TUPSS
Was Entrepreneur misled by the visibility of The UPS Stores and is this why they touted them to the public as a top franchise opportunity? Was the same true of Quiznos? Was AARP, in turn, misled by Entrepreneur when they continued the touting of The UPS Store to their readership. How can this be stopped and wasn't this all made possible because these franchisors could hide the fasilure rate of their franchised business plans in the UFOC's? Isn't the alliance of the SBA RegistryRegistry/FranData/Fran/Vet/VA etc.., while hiding the actual failure rate of first generation franchisees in the UFOC's, a disservice to our veterans who trust their government?Terminal Success
I expect that with some franchise systems being over 50 years old there are a number of reasons for terminations. Anyone can see that some once thriving city centers have been left wastelands by changing demographics and a total change in lifestyle - it's therefore common sense that operators would not renew leases and or franchise agreements in such areas and would be terminations. Terminations would need explaining because they want to show that some could have been initiated by the Franchisor, a potential franchisee would want to be aware of that. Transfers on the other hand are all basically all sales so they all have the same reason - someone sold it. Whether or not they sold it for a good price , more or less than their investment etc. is of no consequence for the purposes of seperating transfers and terminations.
Anyone who wants to know about the profitability or otherwise finds this out during due diligence and can contact all of the previous franchisees who are listed and who can then tell them if they were involved in a fire sale. They can also contact as many of the current franchisees as they want to see if they are happy or about to embark on a fire sale. There are many other red flags to look out for as well as positives - the experts who post on this blog refer to them frequently.
That's not to say that there are'nt brands that do all of the dirty deeds mentioned by you and others. They are definitely out there and are mentioned often enough here. That's why due diligence is a must.
PizzaGuy
Yep It's Luck - the harder you work the luckier you get
I kinda thought you would be able to provide quite a bit of background on success. ( Although your spunky success definition seems to be the credo for the 3 Muskateerettes mesdames Lohan, Spears and Hilton ).
I also thought about goals but that's subjective and that's why I thought it interesting to pose the question as to what constitutes success. If someone does a business plan then they have a goal - if the plan called for $100k owner cash flow in 2 years and they make $75k is it a success? It's certainly an unattained goal?
When someone graduates with less than 100% grades ( the goal ) are they successful?
I think that looking at the question from the success end of the spectrum may shed some light on the failure end.
PizzaGuy
In agreement with Paul
I agree that the WSIWYG EDITOR was MUCH EASIER. I don't know about Bob --- but I'm a long way from NerdSpeak --- like everyone I simply learn to Overcome, Improvise or Adapt! And so you can repeat your success there is a LITTLE CHEAT SHEET at the bottom of your screen in the bulleted text which says EASILY LINK TO TERMS, SEE .... all you have to do is to remember to replace the "/interwiki/1" with your hyper link and the second interwiki with the text to be displayed.Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
There are geeks, then there are GEEKs
Hey! I'm not your hero? Since when?!? I like techy things but Google's Sergey Brin might as well speak Russian if he spoke his level of NerdSpeak with me. I can hear him now. "You! Nyet geek?!?" "Net. Net." I'd say in broken Russian.Scribe Fire Trick
Paul, Install scribe fire. It is a plugin for Firefox, which will allow you to use the idiot box like commands. Type your post, as you would normally. Then hit the <A> tab, and copy and paste the contents to Blue Mau Mau.Michael Webster PhD LLB
Misleading Advertising Law
Answers
Dear Guest,
Maybe. Maybe. Yes. Difficult. No. No.
We jest because
where is your evidence of this grand alliance? Don't regurgitate that they all appear within the same paragraph and *gasp* sometimes even in the same sentence, but rather why you know that said alliance is attempting to hide the failure rate of 1st gen franchisees in the UFOCs and that the alliance is targeting veterans - and no, stating that Item 20 is ambigious, and that there is not enough being done to clarify said ambiguities, is not sufficient. Its akin to me stating that the government endorses pedophilia because although the government does take some action (prison, sexual predator registration), since I don't think it is solving the problem and my solution is not being implemented (castration and then lobotomies just in case), there is obviously a conspiracy between the government and pedophiles to abuse our children. Give us something to rally behind besides the same old same old with no substance.
Misleading by the IFA
The IFA has also something to do with misleading people who trust the organization being professional and knowing what is going on in the industry it represents. Just look at who is getting the Entrepreneur of the Year Awards. Although the awards are not alone handed out by the IFA, the IFA has a lot to do with it who is getting the award. They are supposingly doing a critical check on the business, visit the offices, etc. I was there and I can assure you this is the most embarrassing audit one can imagine, nothing more than a fancy lunch and walk through the office building to be able to say "I was there". So anyone trusting this award as an indicator of a good franchise is likely to be fooled. I am sure there are some that deserved the award in the past, no doubt. But blindly trusting it is like anything in business, so I suggest you look beyond the fancy stuff and check the references well before you invest the life savings. So who was it again who got this award in 2003 and 2004? Strangely enough two competitors, both sitting on the IFA board, both suffering from heaps of resold franchises, both dealing with quite suspicious franchise network size figures....Dale, the shoe fits
Dale wrote:but I'm a long way from NerdSpeak Dale, when you know enough to call it a "WSIWYG Editor" and not an "Idiot Box", you are either born after the fall of the Berlin Wall or you are indeed proficient (if not fluent) in NerdSpeak.Bob
Don't take it so hard, Paul only agrees with Dale and I when the planets align just so, as otherwise agreeing with us would be an indication of him suffering from some sort of debilitating mental disorder, and obviously that is not the case here - merely periodic astronomical events here doctor, nothing to see here...King of the Blue MauMau Geeks
Now that is geekspeak spoken flawlessly. I say we nominate Mikey as the king of the Blue MauMau geeks. All in favor, say aye. Aye.Bob - Magic 8-Ball?
Bob --
Are you playing with your Magic 8-Ball again? I can't believe "Without A Doubt" did not pop up once, or because of the complexity of the questions did you consult with your Ouija board?
GUEST (don't tell Bob, but) Both the Magic 8-Ball & the Ouija board can be purchased in gently used condition for very little on ebay.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Jesting about Aliance of IFA and FTC
Again, Bubba, you use the word "conspiracy" to describe the deal that the IFA and the Regulators put together to avoid disclosing the actual failure rate of first-generation franchisees business plans to prospective buyers of franchises It is so obvious and is public policy and the long-standing status quo that government rationalizes as being for the "public good." Because, only the first-generation franchisees are the big losers and everybody else earns profits, the status quo is supported by all of those who profit from the status quo. But, does this make the status quo that sacrifices first-generation franchisees to ineffective disclosure and turning and churning the right thing to do. Michael Seid wrote an article on Item 20 that supports the status quo and it is pretty obvious that he didn't intend to disclose that "transfers" generally represent franchisee failure and instead supported the status quo of abscuring the failure rates of the franchised business plans in Item 20. The beauty, of course, of Item 20 is that nobody can say for certain what these transfers indicate in terms of the specific franchise and, therefore, people like you, Bubba, can say "Where is your proof of this grand alliance?" Just what do you think is the purpose of all those "confusing and misleading" charts in Item 20. Of what benefit are these charts to prospective franchisees? Just a big red herring thrown out there to confuse the issue. The references in Item 20 (that invade the privacy of ex-franchisees) that are meant to allow prospects to determine the risk of the investment are a poor substitute for the statistics; i.e. the known failure or success rate of the franchised business plan that is obscured in Item 20 from the view of the government and prospective franchisees. The truth speaks for itself when you look for it!AYE AYE
AYE AYE AYE!!!!!!!!!!!!!!!!!!!!King of Geeks
Bob, if you tell me your external weblog editor protocol, I will tell you mine.Michael Webster PhD LLB
Misleading Advertising Law
One More Answer
Good point, FranSynergy. I forgot the answer, "skip a turn".
"Without a doubt" hasn't popped up yet. I think my Ouija board knows that if it gave me such an answer, I would begin doubting its answer.
Frankman
Alliance on Item 20: Failure
The problem that I have when reading this about 15-20 times a week is that you haven't offered up a solution to the problem that you see. If you could create a solution to Item 20 that other people would agree with, then maybe people will start listening to you.
In my mind this is what would have to be considered:
1. Define Failure. This has got to be something used by every franchisor in the US, and I'm sure that there are about 20 different ways failure could be defined.
2. Financial statements of the closed/transfered stores would have to be made available to the franchisor. I doubt they are going to take a franchisees word on if they failed or not without seeing financial statements.
3. What factors led to the failure? Was the franchisee undercapitalized at the beginning? Did they become passive owners?
The problem I have is that there are so many factors that would have to be considered to determine a failure rate, it would be costly to both the franchisees and the franchisors.
7-306-1840
Guest:
That was: 7 Paragraphs. 306 Words. 1840 Characters (with Spaces) and you DID NOT even come close to anwering the question within the guidelines required by Bubba's post.
Why don't you try again --- provide something substantial or move on to a new topic.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
Harmuph
Your truth is entirely subjective, much as if I had, with sweeping generalizations and vague references to nebulous correlations, conclusively declared that the glass is actually not half full, but really half empty. The IFA and regulators and a secret deal? Are you serious? Why not throw in the CIA, MI-6, the Council on Foreign Relations and the Bilderberg group? Do I think that Item 20 is vague? Yes. Does this mean there is a conspiracy to defraud veterans? It's a huge leap.
I concede this much to you, some theorize that there are multiple universes, in which every possible outcome has and will occur. Assuming the above, it is not inconceivable that the IFA and the regulators have had a secret meeting and made a secret deal, which would later include the SBA and VetFran, to purposely make Item 20 ambigious in the hopes of frauding veterans and middle-class citizens because it is in the interests of the "public good," and whose agents, one of whom is actually Pope Benedict XVI, is at this very moment rummaging through your cupboards looking for raspberry jelly in an effort to commence a smear campagin against your efforts at exposing this alliance. In that context, your posts actually are not a delusional conclusion predicated upon feeble correlations and unsubstantiated allegations - the truth speaks for itself when you look for it! But I jest.
"To me, truth is not some vague, foggy notion. Truth is real. And, at the same time, unreal. Fiction and fact and everything in between, plus some things I can't remember, all rolled into one big 'thing.' This is truth, to me."
-Jack Handey
JD ------You look for the problems and not for the solution
JD ---You must be one of those accountants who thinks that the government is so dumb that they couldn't figure out how to make the franchisors reveal the rate of failure of first-generation franchisees who are now hidden in the transfer columns of Item 20 of the UFOC. While I agree, JD, that there may be many reasons that franchisees can fail and many factors involved, when too many first-generation franchisees fail, there is something wrong with the franchised business plan and not with the franchisees. You seem unwilling to accept and understand this premiseWhere is your truth, Bubba?
I have asked you, more than once, for your explanation of the Item 20 Charts that so many attorneys, etc.. have described as imprecise, confusing, capable of being manipulated, etc... Do you think your government just woke up one day and said I am going to devise an imprecise, confusing, and hard -to- understand series of charts to enable government to protect franchisees from franchisors under government regulation of franchising? What, in your mind, is the purpose of regulation? What is the purpose of the Item 20 charts in terms of its value to prospective franchisees? What is the best way, in your opinion, to determine the success or failure rate of a franchised business plan ---for the purpose of determining the risk of the investment? You just spout a lot of BS and don't come up with anything on which to base your put-down of my belief that Item 20 is a deal between the IFA and the FTC. The truth so often speaks for itself. Those who don't want to look for the truth and who reject it on the basis that it can't be proven to be the truth are so often those who are not served by the truth. You know by reading this site that the research on the failure rate of franchising has been flawed and skewed to mislead franchisees and that the IFA has been instrumental in putting out false figures on franchise failure and success that they correct and reject only when they are caught in the act. You know that the IFA protects churning and those who have used churning as a management tool. But, yet you find it hard to believe that the government and the IFA have a DEAL. This is the way of things!Answer JD's ?'s
Oh come on now! JD has been about as Fair and Patient with you as anyone could possibly be. All he's asked is that you apply some definitions to your claims.
I believe that those first generation franchisees that fail -- the ones you keep talking about -- are in fact envied by the first generation franchisees who succeed!
You know why -- because those first generation franchisees who fail -- do what most people do --- (everyone except you that is) --- they get up dust themselves off and try again. How do they do this --- oh haven't you heard?
They buy each others first generation failures (at fire sales) and become HUGE success stories due to the lowered initial investment. All the while the first generation success sits by scratching his head saying "I had to work hard to make my busines work and to pay off all that debt load --- I shoulda failed in my first franchise and bought a 2nd Gen'r.
As illogical as the above sounds --- it's about as logical as anything you've posted.
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com
No
Rather you are one who appear to spout off that "here's a problem, needs a fixin'," yet when it comes to resolving it, fade into the background. Your tendency to shift the responsibility of resolving an issue that you regurgitate on this site ad nauseum is somewhat annoying. If you are incapable of providing any proposed solutions to this matter of concern to you, kindly say so; otherwise, please do not take offence at those that politely point this out to you, its unseemly and rude to insist that only others resolve an issue that you appear to be the major proponent of (yes I know I ended in a preposition, but I couldn't do it any other way).Z Guest
Give us a solution and if it's good I'll back you up on it, personally, I've thought of ways to do it, but I would guarantee that the costs to both the franchisee and the franchisors outweigh the benefits. There is going be an agreement between all franchisors and franchisees to share information about stores. You probably wouldn't believe how hard it is to get financial statements from franchisees in some systems.
There are always going to be first generation failures, some will be the franchisee's fault and some will be the franchisor's fault. How do you propose to distinguish those in Item 20?
What is an acceptable rate of first generation franchisee failures over the first five years? The system I was in typically saw 75-80% of the stores still open after four years. Is that good? I think that's for each person to determine in due diligence.
Ah
So the problem is my failure to offer evidence to refute a theory you have offered no evidence to support despite repeated requests? You say that "You know that the IFA protects c-word and those that have used c-word as a management tool." I do? How about this - you answer the question that has been posed to you, by multiple people, and I will in turn indulge you. Tit-for-tat.
Incidentally, I am not egocentric enough to proclaim that my personal interpretations on a situation constitute "truth," but am open-minded enough to hear evidence to support other people's assertions of what they feel constitutes "truth," assuming of course, that I ever get to hear said evidence.
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