Businesses Do Not Fail, People Fail -

A lot of time is spent talking about “Franchise and Non Franchise Business Failure Rates”.  It’s often said that various percentages of all businesses fail, or that the failure rate for franchising is X percent and the failure rate for independent business is X percent.

I’m going to suggest that “Businesses Do Not Fail”.  People fail – to properly plan or execute their plan.  Within any franchise system you’ll find people who are both failing and succeeding.  The franchise system is the same, the people and the markets are different.

When one becomes a franchisee, the franchise unit becomes dependent upon the ability of the franchisee to successfully care for and maintain the business.  The franchisee becomes dependent on their own ability AND the abilities of the franchisor to properly plan and execute the plan; vs. the single ability of the independent to plan and execute.

This double dependency can be both a benefit and a detriment.  It’s a benefit from the perspective of ‘two heads are better than one’ or a detriment in - that if the franchisor does not have the ability to properly plan and execute - your survival is at risk.  This interdependency is much like your body.  You can have a healthy brain, lungs and liver but if your heart quits working the others will soon follow. 

The first step in the process of becoming a successful franchisee is in self discovery and determining if you’re right for franchising.  Assuming that you determine that you are, you must then determine what type of franchise you’re right for.  This determination is to assist in selection of not only the concept, but also the level of training, coaching and support you require from your franchisor.  Armed with this ‘self-discovery and needs analysis’ you can now begin to look at the opportunities that best match up with your own knowledge, skills abilities, strengths, weaknesses, threats, goals and ambitions.

As you begin to evaluate the opportunities you then must evaluate the viability of the various opportunities and weigh the franchisors ability to plan and execute their plan.  You must look at their plan and determine how it meshes with your plan.  If it appears to be a good overall fit, you then must begin to perform your due-diligence, your ‘validation’ of all that you’ve learned about their plan and their ability to execute both historically and into the future. 

Assuming that after validation the franchise concept continues to ‘hold water’ you must then begin to incorporate their plan into yours and see how the two really work together.  It is in this step that you begin to ask What If…What If….What If!  You begin to play devils advocate.  It is here where you’re going to begin to develop the contingencies for every situation, both positive and negative.  Too many start-ups spend too much time planning for everything to go right, and when they go wrong the franchisee doesn’t know what to do.  The idea behind planning is to say ‘okay, if this happens this is what I do’.  You must answer questions like: if I don’t have a protected territory and the franchisor elects to grant another location within my service area how will my business be impacted.  If the profit generated from a single location will not support the lifestyle which I want, will I have the resources to secure a second, third and fourth location?  In the event that additional locations are necessary will I be happy managing multiple locations?  Will the franchisor grant me additional locations?  What happens if I run out of cash before the business becomes profitable?  What happens if I’m unable to continue in business?  It’s important that anyone considering a business venture spend two or three times the time thinking and planning about what they’ll do if things go wrong as they spend thinking about the new house, car, boat, or plane.

If the franchisors plan and ability to execute their plan meshes with your plan and your ability to execute your plan in unity – you may have found the right franchise concept.  If not you must repeat the process.

Your business can not succeed without you, your plan and the execution of your plan.  As a franchisee your ability to plan and execute will be dramatically impacted by your franchisors ability to plan and execute.  If either of you fail to plan and execute in harmony, the business as a result is almost certain to fail.

FranSynergy provides both assistance in franchise selection and business planning services prior to and following the acquisition of a franchise.  Whether you use our services, those of someone else or do it yourself, it’s imperative that you have a plan and properly execute the plan.  Otherwise your franchise is like a ship without a course, nowhere to go and disaster a very strong probability.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

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Comments

Businesses Fail All the Time

"I’m going to suggest that 'Businesses Do Not Fail'. People fail – to properly plan or execute their plan." - FranSynergy

Ever start up a company that despite all the super human efforts you put into it failed? Businesses do fail - and for many reasons, despite being able to execute the business plan or the ability to compound one's headaches by buying several franchise units because the first isn't going right. Sometimes, the business itself is faulty.

Novo Rector

System Failure

We would view SBA loan failure data and comparative data of franchised vs. independent business longevity as measures of the efficiency of the process you have outlined.  The independent business evaluation process measures the analyitical ability of those people to execute the process, select competent advice and employ their experience to pursue their idea of success.  The franchised business process obviously brings the franchisor into the mix and we would hope that brings to the table only the soundness of the franchisors plan and their ability to execute.  However, if the franchisor is primarily interested in selling franchises and collecting money and builds their system around that rather than the concept plan and execution the evaluation process is subverted to some extent.  Much of what we discuss in the community is limiting the ability of the franchisor to conceal information useful to the efficiency of the process you describe.  A fortunate prospective franchised business buyer would find your business and have the wisdom to take advantage of your experience.  Many are not that fortunate  If the power the franchisor has to conceal turnover and failure in their systems were removed all parties would be better served.  The process would need to be then focused on mutual success.

System Failure

We would view SBA loan failure data and comparative data of franchised vs. independent business longevity as measures of the efficiency of the process you have outlined.  The independent business evaluation process measures the analyitical ability of those people to execute the process, select competent advice and employ their experience to pursue their idea of success.  The franchised business process obviously brings the franchisor into the mix and we would hope that brings to the table only the soundness of the franchisors plan and their ability to execute.  However, if the franchisor is primarily interested in selling franchises and collecting money and builds their system around that rather than the concept plan and execution the evaluation process is subverted to some extent.  Much of what we discuss in the community is limiting the ability of the franchisor to conceal information useful to the efficiency of the process you describe.  A fortunate prospective franchised business buyer would find your business and have the wisdom to take advantage of your experience.  Many are not that fortunate  If the power the franchisor has to conceal turnover and failure in their systems were removed all parties would be better served.  The process would need to be then focused on mutual success.

Novo...Buggy Whips

Novo...

Thank You, for your thoughts.  I'll certainly agree that poorly planned businesses fail, however it is not the business but the plan and its execution that fail.  If one starts with poor plan the result will be poor.

A successful Buggy Whip Manafacturer of the 1800's would surely fail if they failed to plan and transition into additional product lines in the early 1900's with the advent of the automobile.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Right On, Novo Rector! Business Plans Fail

One of the "mind" games that "churning" franchisors play with failing franchisees is "you have failed" ----when in reality the franchisor has a "flawed" business plan and only looks viable because the network has been built to a great extent on "discounted stores". Obviously the second- owner-franchisee has a better chance of breaking even because they had the benefit of the fire-sale of the tangible assets and also get the intangible asset of the sales built up by the initial franchisee who has failed for nothing. And, of course, there is no interruption in the flow of royalties to the franchisor.
Believe it or not, Fran Synergy has indicated in past posts that it is possible that some franchisors offer flawed business plans to the public. He implies that he can overcome a flawed business plan with BS tactics.
These same franchisors then push the purchase of more than one unit to the franchisee with the carrot of the PROFITS that can be doubled or trippled in the ownership of multiple units. A rational human being would not believe that a franchisor would be so evil as to push the purchase of more than one unit if the franchisor wasn't offering a viable franchised business plan. And, as Lamont Cranston said "Who knows what evil lurks in the hearts of men?"
In some predator franchise networks, even the second and maybe third owners can't make it because the business plan doesn't provide profits and they remain trapped at "break-even" or "barely break even" or fail and terminate.
The word "trapped" is accurate because the "break-even frasnchisee" has to remain in place to service their debt to avoid losing everything and going into bankruptcy. The Franchisors are aware of this and since THEIR PROFITS are not at risk, they use the "adhesory" contract with the threat of, often arbitrary, liquidated damages or owned royalties clause to hold the franchisee "breakevens" in place at breakeven. Often "breakeven" in some franchise networks means that the owner-franchisee is workinf for nothing.
They also use the threat of these liquidated damages to insure that failed and terminated franchisees will cooperate with the acquisition of the failed unit by a third-party.
It appears that once the franchisee is in default of a loan, a third party can make a small offer for the tangible assets of the failing unit to the bank that holds the loan. The banks, of course, accept these very small offers where the FMV is determined by the franchisor because they are then free to collect on the balance of the loan from the franchisee who probably used his house as collateral.
It is "Win-Win" for the franchisor and "Lose-Lose" for the franchisee. When you sign a contract with a churning franchisee and use your own capital and your own labor to "wear the famous brand name", you can be sure that they know your assets will be theirs in failure. They premeditate your failure and the acquisition of your assets in the franchise agreement and in their practices.
Item 20 of the UFOC disguises the failure rate of business plans by permitting the franchnisors to indicate that these failed units are transfers. It appears that the NEW changes will allow even terminated units that are immediately acquired by third parties who operate under the franchise to be disquised as something other than a business failure.
This imprecise disclosure to the public is a subsidy for the franchisors because the government knows that naive prospects who are looking for a job or looking for a way to increase their income will confuse the appearance of "expansion" with "profitability" when viewing the imprecise Item 20 disclosure. Those who defend Item 20 defend it on the basis that there are some transfers made at a profit to the franchnisee, while admitting that there are probably not many profitable transfers. The visibility of a famous brand name does invite confidence that their brand name stores are operating at a profit. (The truth is that a great percentage of the American public don't understand that these franchised stores are not part of the fasmous brand, and are just little business people trying to make it).
I think Fran Synergy, Mr. B.S., makes these positive and irritating statements to stir the waters and to keep the conversation going.

I agree --JB --Mutual Success should be the Goal

I am sure that many franchisors operate with the view that mutual success is one of their goals.
However, because the frnchisor is successful in gasrnering royalties, commisions, fees, etc.. regardless of whether or not the franchisee is operating at a loss, break-even, or profit, they have the ability to "Churn" to remain viable.
Because they can churn, they do! And, the regulators permit them to hide the churning in the UFOC's.
Thank you for your statement "If the power the franchisor has to conceal turnover and failure in their systems were removed all parties would be better served. The process would need to be then focused on mutual success."
You are absolutely correct, JD, but how can franchisees remove the franchisor's power to conceal the ACTUAL FAILURE RATE of their business plan when government cooperates in the concealment of the failure rate with Item 20 IMPRECISE disclosure?

Novo...Buggy Whips

Novo...

Thank You, for your thoughts.  I'll certainly agree that poorly planned businesses fail, however it is not the business but the plan and its execution that fail.  If one starts with poor plan the result will be poor.

A successful Buggy Whip Manafacturer of the 1800's would surely fail if they failed to plan and transition into additional product lines in the early 1900's with the advent of the automobile.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Not necessarily a true statement

Buggy whips are still in high demand in Amish country as well as the burgeoning S&M industry. Perhaps the lesson is not necessarily to diversify your product portfolio, but your target audience.

Buggy Whips: Supply & Demand

Granted, however please keep in mind that there existed a large supply of bugy whips at the time that the demand began to shrink.  Therefore the law of supply and demand would not allow for all to focus on the limited target audience and remain financially viable.  Therefore the plan would need to allow for rapid diversification.

You do raise an interesting point in that had ebay existed back then, the opportunity to sale your used buggy whips to the S&M market would have been huge.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Buggy Whips: Supply & Demand

Granted, however please keep in mind that there existed a large supply of bugy whips at the time that the demand began to shrink.  Therefore the law of supply and demand would not allow for all to focus on the limited target audience and remain financially viable.  Therefore the plan would need to allow for rapid diversification.

You do raise an interesting point in that had ebay existed back then, the opportunity to sale your used buggy whips to the S&M market would have been huge.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Is this a Porn Site -----Whips and Quips! and Blue

Are there any sex shop franchises?

Franchised sperm

I do recall that someone in Texas was going to franchise cattle semen, but I don't know if they ever did. But since you raise the issue, while I am not aware of any sex shop franchises, one of our local merchants (near the infamous Taco Bell) does have a business opportunity for Mr. MauMau's website...

Franchising Love

Leave it to those Canadians.  Since you asked our database of some 5,000 franchise concepts includes The Love Boutique.  (If you object to sexually explicit material this link or franchise concept may not be appropriate).

Franchise Fee: $30,000Total Investment: 130 - 200KFranchising Since: 1999

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Franchising Love

Leave it to those Canadians.  Since you asked our database of some 5,000 franchise concepts includes The Love Boutique.  (If you object to sexually explicit material this link or franchise concept may not be appropriate).

Franchise Fee: $30,000Total Investment: 130 - 200KFranchising Since: 1999

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Franchise Times & sex

March 2007 issue of Franchise Times has article on Pole Dancing franchise (p.14), says that "Size does matter" (p.46), has a photo of men holding hands with an accompanying story on hotel franchisors catering to the gay traveler (p.54) and discusses the "Adam & Eve" franchise which provides a "safe, friendly environment...to explore romance and erotica" (p.76).  Times Square is now the home of Disney musicals, and Minneapolis is getting kinky...Now, if Mary Jo Larson would only bar her reporters from relying on Wikipedia for data (we have seen how Wikipedia can be manipulated ), I would highly recommend subscribing... There is a lot in just the current issue (including a favorable piece discussing BlueMauMau and the Cuppys blowup--without mentioning the zor by name) which relates to matters being discussed on this board. The "Wikipedia" cite is an isolated incidence of sloppy research; the articles are normally well-sourced and present zor and zee positions. Seriously though; Franchise Times is a must-read for anyone in this industry, and I give all of my new franchise clients a gift subscription.

You are so well read, Paul!

I know Mr. Blue Mau Mau will be very grateful for this "once in a lifetime opportunity" and will share it with his readers.

On the Other Hand

While franchising bull semen may be in doubt, we have abundant example of bull feathers (you know wht I mean) being succesfully franchised.

Gene Simmons: Franchise Bull.

Paul, perhaps you caught the episode of the Gene Simons show "Family Jewels" where he visited the ranch, and actually extracted the bull semen.  And had the idea to franchise it.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Love for Sale -----Sure thing ! Sex sells!

I knew it! Now, the Canadians are beating us in the market place! It won't be long before "pornography" as "product" will be franchised in the USA. I think Community Standards under law already allow the sale of the toys, etc.. in American Communities and the new franchise "Love for Sale" is probably already in the planning stage. If the sale of the sex toys is already permitted under the law in American communities, I'm sure that the instructions on how to use them will not be considerned pornography under American law if there is any talk of "love" in the instructions.
Paul knows a lot about the law and love and stuff, maybe, and he can "post in" on this.

Zee liability for explicit material

On a serious note, the issue of shipping explicit material to certain areas of the US was a recent concern of UPS Store franchisees , and before one of the Canadians sends a gift to FranSynergy by UPS, remember to check out the laws of Alabama ;)

Love in the Heartland

I'm not sure if they are franchising, but Christie's Toy Box out of Oklahoma City has put a lot of locations in that area. They have been to ICSC (International Council of Shopping Centers) shows looking for strip center locations. That is something to think about as one might end up on the other side of the demising wall from your Quizno's , Little Caesar's, Subway, etc.

On the Other Hand

While franchising bull semen may be in doubt, we have abundant example of bull feathers (you know wht I mean) being succesfully franchised.

Gene Simmons: Franchise Bull.

Paul, perhaps you caught the episode of the Gene Simons show "Family Jewels" where he visited the ranch, and actually extracted the bull semen.  And had the idea to franchise it.

Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!

Love in the Heartland

I'm not sure if they are franchising, but Christie's Toy Box out of Oklahoma City has put a lot of locations in that area. They have been to ICSC (International Council of Shopping Centers) shows looking for strip center locations. That is something to think about as one might end up on the other side of the demising wall from your Quizno's , Little Caesar's, Subway, etc.

Bull Semen in a Big Market --On the Other Hand

The semen of champion bulls go for big bucks and this isn't B.S.! On the other hand, who controls the market in Bull feathers?

yeah! sex sells!

The F...ing Profits ought to be F---ing good!

UPS Zee's Liability for Explicit Material

Didn't I read on Blue Mau Mau that UPS Zees are also responsible when dangerous materials are mailed or shipped. But, how could UPS Zees or any Shipping-Postal Franchisee be responsible for drop-offs that have been previously packaged and are mailed under the franchisor's program? More Brown stuff or is this true of all postal stores ---FedEx, Postnet, etc...?

Let's get to the bottom line

So if the business fails, whose fault is it?

The bottom Line of Fault --Whose Bottom Line

The bottom line is that all franchised business plans experience some rate of failure but the rate of failure should be plainly and accurately disclosed as a "due diligence" tool for prospective franchisees and advisors and attorneys, etc.. who assist franchisees in making perhaps one of the biggest decisions of their life.

In retrospect, I would suggest that any prospective franchisee use outside, disinterested, educated third parties to advise them in the purchase of a franchise. I don't think that full disclosure would hurt the "advisory" side of franchising and I think it would improve the sales of those franchisors who do offer a viable business plan with profits to the public.

It may be that the really big franchisors and the huge networks believe that a certain amount of churning is necessary to stand up these networks in the beginning and this is why there is no precise disclosure of the failure rate of the franchised business plan. It may be that the regulators allow this because the failure of the
franchisees in the churning mechanism insures the visibility of the network and their viability while hiding the actual failure rate of the initial franchisee who bears the cost of building the unit.

The advisors who post here are honest in their comments and they tell you that they generally do the math and count the transfers as business failures. But, they know that many prospects don't use advisors and don't do the Math and are blinded by the presense, the visibiliy of the brand name. These franchisees are using their savings and the startup costs are looming and they believe that it isn't necessasry to check out a BIG BRAND NAME with a big presence in American communities.

We need the truth of the failure rate in Item 20 and we need to work for disclosure of sales figures and earnings, etc..

When government permits the disclsure under law by franchnisors without sales figures and earnings claims, etc.. and without the disclosure of the REAL FAILURE RATE of the franchised business plan, what is this? -----A SUBSIDY for the FRANCHISORS.

I agree but also disagree

In some respects you are suggesting that franchisors provide potential franchisees a franchise on a silver platter. There must be a balance between disclosing relevant material to a prospect and the responsibility of an investor to perform their due diligence.

If you are putting up your home, savings, IRA, etc, then it would behoove you to conduct yourself accordingly. However, if the franchisor is complicit in obfuscating that which a reasonable investor would reasonably find relevant in determining whether or not to pursue such an endeavor, then that is a separate issue.

I think that it is overly simplistic to lump franchising in general as a deceptive practice. While there are genuine horror stories, there are also successful businessmen and women who success has more to do with their own business acumen and perserverance than with the failings or assistance, if any, of the franchisor. There is alot of wailing and gnashing of teeth, in some cases justified, but some of it not. For someone with little business experience to liquidate their home equity and savings into something they have little experience in, sometimes without the advice of financial and legal counsel, and then complain when said business fails and then attribute the failure to the franchisor suggests to me their is actually a failure to bear one's appropriate responsibility for the mess one has created. While there are always exceptions, this should not be the general rule, but it appears that most wish to make it so, probably from the psychological tendency to support one who is perceived to be an underdog, despite if such a status is self-inflicted.

Franchise on a Silver Platter or Fool's Gold

Item 20 is an IMPRECISE disclosure of the status of the units entering and leaving, i.e. the expansion or the contraction of the network, or the turnover of the last three years, and it is imprecise because it doesn't tell the truth about the status of the units leaving the franchise in the past three years. Units are leaving after either a business success ---they have sold at a profit ---or they are leaving at a loss ===they have sold at a loss of almost their entire investment ----or they have been terminated by the franchisor or they have "abandoned" their units under the terms of the franchise agreement. All of these outcomes are not disclosed in Item 20 and therefore, Item 20 is open to interpretation and is incomplete and misleadin and hides the failure of the business plan from the government as well as from the franchisee.
Nobody knows the failure rate of the franchised business plan except the franchisor and the government doesn't think this is information thatr they should require the franchisor to disclose.
Are you telling me that the failure rate of the franchised business plan is not of utmost importance to a new buyer of this franchised plan?
I have never said that all franchisors are predators or that franchising is a "deceptive" practice. I see there are successful frnchises out there. I have said that the nature of franchising encourages predatory practices that are not uncovered in the disclosure circulars.
The failure rate of the franchised business plan is of utmost importance and should not be disguised under Item 20 disclosure. If the UFOC is a "scavenger hunt" or a "treasure hunt" or "hide and seek", let the government regulators state in Item 20 that the statistical disclosures do not represent the success rate or the failure of the business plan of the franchisor, and are "merely" an imprecise picture of the visibility of the franchise in American communities.

Okay, but...

I get the tenor of your argument. I realize that you want what is best for the franchisee. However, I would wager that the franchisor has a legitimate stake at issue here. The UFOC was forumulated due to the capacity for a franchisor to do wrong. I would be concerned at making the UFOC an instrument where the franchisor is exposed to potential business or financial liability. You are saying it is not enough to require the franchisor to state that X amount of units have left the system. Where is the line to be drawn? What of arguments that franchisor's operating manual has procedures that have negative repercussions for the franchisee - should this be disclosed? At some, the entirety of the franchisor's business is laid bare, leaving any mom and pop with the fundamentals to create their own operation at the expense of the franchisor. There has to be a reasonable balance between disclosure of reasonably relevant information and the death of franchising (not to be overly melodramatic).

Okay, But ----the nature of Government Regulation

Assuming the government regulates certain activities in the business sector for the public good, we must first establish that government determined that they would regulate franchising because of the abuses by franchisors of the public trust. The nature of government regulation is defined as the duty of the government to protect the weaker party in the relationship.
Franchisors, who are of course the stronger party in the relationships with the famous Brand Name and the adhesory franchise agreements would prefer not to be regulated at all.
Have you ever read a franchise agreement? Do you understand how the franchisee-franchisor relationship is defined under law. It is not a legal marriage of interests; the franchisee is in no way a part of the Corporate Brand franchisor. The courts have determined that the franchisee-franchisor relationship is not a fiduciary relationship because, of course, the corporate brand has no investment in the franchisee's business.
But, of course, the franchisor determines the hours of operation, the uniforms that will be worn, the color schemes, the pricing, the software that will be used and the supply lines that will be used, and the terms of the royalty payments, fees and commissikons. the number of days the bsiness cas be closed for emergency illness before incurring termination, etc.. The franchisor determines the "cures" for trespasses against the Brand name and gets to interpret all of the terms of the adhesory contract in its own interests. There is no bargaining of these terms.
The franchisee agrees to all of this when they sign the franchise agreement because they think that they will profit from the relationship because of the Big Brand Name that they are renting under contract. .
Franchisees are investing their own money and their own labor in this releationship and to suggest that they don't work hard and long to make the franchise a success is nonsense. But, if they work hard and long and are working with a flawed business plan that doesn't allow them to meet the necessary overhead expenses, they fail. But, the franchisor hasn't failed and will continue to collect royalties, fees, and commissions all through the failure of the franchised business. The franchisor, in the adhesory franchise contracts, have anticipated and premeditated the acquisition of your assets when you fail and your assests will go on to serve the franchisor one way or the other.

You seem to think that there are no "non compete clauses" and that franchisees can just quit or something and deidentify with the brand and use their assets on their own! This is not true! If the business is closed for any reason, the franchisees cannot continue to earn a living in the same field for as much as two years and the value of their assets is determined by the FMV set by the Franchisor, who often doesn't include the lease improvements you paid for in the FMV of your tangible assets. Yet, the franchise concept is advertised and sold as "a business of your own"!
Since the franchisee is the weaker party in the relationship from the beginning to the end of the contracted term, the franchisee should be provided enough information to make an informed purchase of a franchise.
If the Government is going to pretend that they are regulating franchising in the interests of the weaker party, the franchisee, they should require the disclosure of "the failure rate" of the business plan and the disclosure of earnings and sales figures upon which these "winning franchise business plans" are based. The government should regulate franchised business opportunities as least as well as securities are regulated.

The franchisor is the stronger party with the absolute ability to destroy the franchisee almost at will through the interpretation of the adhesory contract.

The nature of government regulation in our democracy is such that many of the regulators go to work for those that they regulate when they leave the government service. It is not a secret that government favors the larger corporate entities and that these corporate entitites allow themselves to be regulated by the government under terms that are agreed to by both the government and the corporations. The larger corporations also have greater influence with The Congress and bills to protect franchisees hazve been defeated.

We do agree on some things

I agree that there is a disparity in bargaining power between franchisor and franchisee. I agree that courts overwhelming view franchise agreements as contracts of adhesion. But I would disagree that a franchise relationship is not a marriage of interests. The franchisor has an interest in promoting their brand to the public - the franchisees are the medium by which they do so. The ultimate end result is that if the franchisees in general fail more likely than not, the franchise itself has no value, and the franchisor will accordingly fail.

I would also agree that franchisors that are only in it for the short term may include such an analysis into their operating strategy, to short-change a franchisee for immediate gratification.

I would disagree that this is endemic across the board or that re-structuring of the UFOC is the end-all-be-all to this problem. There are shady franchisors. There are idiotic franchisees. When the stars align and they meet, there is a recipe for financial disaster, usually for the f'zee. Granted, there are concepts that appear fine at the onset, only to be brought down by overlyzealous franchise agreements, but at some point there has to be some measure of responsibility on the part of the prospect.

If I see that a franchise has 600 stores in its system, and a third are in some degree of flux, that puts me into "question mode." Inquire. Get answers in writing. Establish that you have an interest in where your home equity/savings/etc gets invested.

While having Congress enact more laws, and have administrative bodies create more regulation can enable change, there are bureaucratic practicalities that must be accounted for in your hope that this is the best measure of protecting a franchisee's interest.

In the end, it is your money on the line. Congress and the FTC will do what it can to help you in that the playing field is not overly tilted in favor of the franchisor (and I am not arguing that it isn't - it is), but again, in the end, a franchisee must take the UFOC information and run with. To rely on it for its face value fails to do your investment monies credit. Dig deeper. I wouldn't have known Quiznos sucked until I did research. I don't know the viability of Cold Stone Creamery. I wouldn't have know the perils of "Brown" unless I did research as most only see what UPS shows you.

In the end, it is your money on the line. I would just suggest that franchisees act like that means something.

We do agree on some things!

I misspoke! If franchising is a marriage of interests, the franchisor, in many networks, enters the relationship in contemplation of the divorce and already knows that he will get EVERYTHING when the divorce is final.
Bad faith practices appear to be enabled by the Franchise Agreements and are never seen by the courts because of ADR, and because, of course, so many franchisees are destroyed and have no access to either ADR or the courts.
Again, I fully agree with you that there should be intensive research and the UFOC shouldn't be relied upon, etc.. but the fact remains that "naive" prospects, those not experienced in business practices, TRUST the big brand name and believe that the VISIBILITY in the communities of this country is proof of the viability of the business plan.
I'm sure the government regulators know that there are many franchisees who do not use outside advisory services and rely on their own due diligence----to their great regret.
From the standpoint of franchisees, the UFOC's that permit disclosure without sales figures, earnings, etc.. and without clear disclosure, at least, that Item 20 is only an imprecise presentation of stastistics that presents a view of the turnover rate of the neetwork and that the government has no idea whether or not this turnover is due to business failure or business sucess of the franchnised business plan.
It is the cooperatikon of the regulators and the Congress with the franchisors to obscure the failure rate of franchises that I find so unconscionable.