Franchising Needs Better Government Regulation
Discussion of legislation and political advocacy regarding franchising.
Distraction and Reaction Quiznos
The mantra of the franchisors has always been to prevent collective bargaining or negotiations of any kind. Keep the franchisees silent and DIVIDED and impotent and in their place. Franchisors must deal one-on-one with their franchisees. FAC's that are controlled by the franchisors are offered as the solution to conflict and to success for the franchisee, while always primarily protecting the franchisors bottom line.
When franchisors can be successful when their franchisees are operating their businesses at a loss, or breakeven, or at a profit, they are in no hurry to solve problems. While Quiznos has no investment and no ownership of these individual stores, they know that they OWN that individual franchisee lock, stock, and barrel through the terms of the franchise asgreement as long as they can keep their franchisees DIVIDED and out of class actions.
The franchisor is primarily concerned with his profitasbility and will only worry about the actual profitability of his franchisees if this starts to impact his profitability. Quiznos is a good example of this and their effort to contain matters while they spread into the international markets.
Quiznos and The UPS Store and Cold Stone Creamery and others know that those franchisees teetering at break even will continue to stand in place because they have to stand and service their debt or lose everything. Those who fail will fail into bankruptcy and silence and won't have the funds to support law suits.
Attorneys do not take franchisee lawsuits on contingency terms when they look at the status quo of the law and franchising. Quiznos can always depend on their sales units to sell new franchises to replace those who have failed and sell 99% discounted units to those franchisees who want to be multiple-store owners.
Our good attorney notes that Class Actions are generally not allowed and takes comfort in the status quo of the law that generally favors the view of the franchisor because it is the franchisor network that feeds the economy, and not the individual franchisee. The view of "the greater good" in public policy and the law works against the interests of the individual franchisee who is the source of venture capital and labor for the franchisor to build his network.
The lawsuits are just a distraction for Quiznos and the other predator ZORS and they know that only a few from the total franchisee community can afford to support law suits and that time, financial resources, and the status quo is on their side. This is their view of "fairness." This is the same organization who was willing to destroy the franchisees who dared to memoralize Bob Baber and who still will not speak to the TSFA.
Too bad, so Sad! The big swindlers are always in style and are permitted by government to sell unviable products to the public because the big swindlers contribute to the economy and are in bed with the FTC.
I agree, but what is your solution to people who dont read the UFOC?
When TiF starts to tell the truth
When you, TIF, stop defending the status quo wherein big networks can sell unviable franchise products to the public, and start telling more truth yourself, I'm sure you won't find my comments bitter.
I always separate the predator franchisors from the ordinary franchisors but the fact remains that the FA's together with the UFOC's permit predators to sell unviable products and grow their networks on the flesh of innocent franchisees who are just a cheap source of capital and labor for the predator.
Just look at the Coffee Beanery Mess and you see the federal policy. The IFA and the FTC are in bed together and the Arbitration Industry joins them in a "French Connection" and the franchisees are toast.
If you don't like my truth. put your own truth out here to refute my truth instead of always attacking me.
If Franchising can stand on its own merrits and the true risk of the investment is disclosed in statistical terms to new investors, I am not against franchising.
When the true risk is disclosed and the buyer signs the contract, this is informed consent. You and others in franchising are "enablers" of this ugly status quo and this is why we have the mess of Quiznos, The UPS Store, CSC, The Coffee Beanery and who knows how many others who are eligible for "quickie loans" on the SBA Franchise Registry.
Clean up the act TIF and get off my back.
Zee's need represention!!!
Y'ou just don't get it!! Like when buying a house a real estate agent represents their clients. They have a fiduciary duty to represent their client and have their best interest at hand at all times. There is no such thing in the franchise world. You can go to a lawyer and if that lawyer is not doing their job right like ours did you are sol. That lawyer should of advised us to go to a franchise lawyer. Did he? No. If you never bought a franchise how would you know. I understand why many people do not understand the UFOC. Just like many do not understand real estate contracts that is why they hire an agent. I still believe hiring an agent to buy a franchise is one solution. Someone who can explain the franchise world and contracts.. We need representation that will be liable to help with dd and doing the research for their client. Many of the franchise sales reps are like used car salesmen. Often time it is a hard sell. I tend to stay away from this type of sell people. I believe it takes a professional to read the contracts and explain exactly what it means. Most people do not have the capacity to understand contracts let alone read it. That is why we had a lawyer read it. I know even in our club only one couple read the contract for joining our club. I had to be responsible and explain the key points of the contract. It was only two pages. As the salesperson I felt responsible to explain it to them. Why is it franchises don't feel the same responsibilty? Reason: They just want you to sign.
And then there are the healthy
Franchisors in Australia such as Bakers Delight, Midas and Lenards Chicken cannot sell a franchise and they complain like hell about bad media and negative website content. Well, they provided the content and the people to do it.
If those in other networks that suffer similarly want to achieve the same for their franchisor then they have to make the effort to get the media and create the web content. It isn't rocket science but it does take effort and determination.
While all of those rotten franchisors bleet about their terrible situation then they should have thought about their victims. Now they can think about all those franchises that never get a mention because they are healthy and produce a win/win.
Going after rogue franchisors isn't all about payback either. It is about warning and protecting others and using their behaviour to get better law and better protection. Payback is just the fun part.
Reputational Concerns and Internet Freedom --Trouble for ZORS
I'm sure that the predator ZORS would love to be able to silence free speech of those who use the Internet to expose the exploitation and downright stealing of some franchisors. The only reason that franchising has grown in the US and World economies is that the dirty little secret of the RISK and churning and turning and pumping and dumping has been hidden from the general public and new buyers of franchises.
It is only because of the nature of the franchise agreement and the status quo of the law that silences those who fail in franchising that the hype and selling of franchises as a business of your own has been so easy for the franchisors. They reap the harvest of the good faith of millions of good citizens who are just looking for a job and income to support their families. A franchise is not a business of your own and is just an investment in a business opportunity that is actually a wasting asset if the ZEE does not have the option and the ability to renew the contract.
Heretofore, the voices of the victims have been silenced but now NEW Internet voioces in all of the countries of the WORLD are out there and the ZORS are trying to figure out how to silence these voices. Blue Mau Mau is a Site that permits negative review of franchising and they haven't yet figured out how to close it down.
Someone in Australia should start another website such as Undelightful Baker's Delite Lies! I'm sure that they will be successful in closing down this Website because government is all about protecting brands and trademarks.
Franchising is the biggest thing since slavery in terms of capturing cheap labor as well as cheap venture capital on which franchisors can grow their paper empires.
Censorship --Internet Freedom of Speech ---Austrialia
How gratifying to know that the WARNINGS from the victims have impacted new sales of Bakers Delite and other franchisors.
There is no doubt that the Internet and sites like Baker's Delight Lies and Blue Mau Mau will impact the reputations of bad franchisors who will find it harder to sell their franchises.
The healthy and good franchisors will not want any coverage on Blue Mau Mau except by happy and satisfied ZEES who will sing the praises of their ZOR. The Internet is the new Due Diligence Tool of the weaker party, the franchisee?????
I agree ----maybe the warnings and the reputational concerns will bring new practices and better laws to franchising!
Always --wisdom and hard truth from Richard Solomon
Although Richard sometimes calls me a moron and has great contempt for franchisees who haven't done killer due diligence and who whine on Blue Mau Mau, he has been my teacher. It was his essays and tutorials on franchising that first enlightened me ---along with Les Stewart's "Franchise Fool."
Richard doesn't engage in politically correct bull shit and always cuts right to the heart of things. His $1,000 negative consult on a franchise is the best deal in franchising today. If you accentuate the positive in franchising and eliminate the negative, you often end up a dead duck. Richard always emphasizes the truth that it is better to use an ounce of prevention because the pound of cure is going to leave you with a bad scar and a lot of shit even if you win the cure from the franchisor.
I, too, like John Edwards and Elizabeth, both attorneys, whom I think want the power of the Presidency to do good for the American people ---even those people who don't take showers or change their socks everyday. I see my hero, Ralph Nader, has filed suit against the Democratic National Committee and John Kerry and John Edwards. My idea, as an independent who has voted for Perot and Nader, of the ideal ticket would be Edwards-Nader who might bring some really strong reform to a government out of control and that has been run for the benefit of the large corporations with the help of both the Republicans and the Democrats.
The Press and the Media, of course, don't give Edwards any play because they have other plans. Is is really the corporate media who decide who will be the candidates and who brainwash the public. The business of the Republican Bitch who attacked John Edwards and CNN's and other networks unfair coverage of the haircut indicated to me that the Republicans don't want to face an excellent candidate like John Edwards. They would rather work with racial prejudice and gender prejudice to ensure they win the next election. Apparently, the Republican detectives and the media couldn't find anything with which to smear John Edwards so they decided they would pick on his hair. These people who steal millions of dollars from the people legally know that John Edwards is a very wealthy man who can't be bought and they tried to present him to the public, the middle-class American voters, as a rich lightweight who shouldn't be taken seriously.
All of this media coverage of elections, etc.. and Polls should be outlawed and we should view our candidates only in public debates that are paid for and sponsored by the people. We need clean elections and clean government to sustain our great democracy.
My county 'tis of thee!
My husband and I started the fiasco with Java Jo'z right before the "asset acquisition" and were lied to from beginning to end. We since have lost our store and are being sued by our creditors. We have always had stellar credit and are now worried about our future. Robert "Morg" Morgan told me that he "prayed on it" and I should quit my job as a teacher and all would be fine. Well I am still unemployed and without our store. We had great reviews in the community but could simply not overcome the hole that their lies put us in. We have a second mortgage on our house and that does not count the $229,000 that we owe on our business loan. Our attorney told us that we have a 6 figure case but will not take us on without a 25K retainer. Cuppy's has sapped us. We were one of the first cafes and they learned all of their lessons on our back. Lessons like changing the sign for the cafes while we didn't have proper signage for almost 4 months. Please anyone who is considering anything to do with these people run screaming. You will be left with nothing and no recourse. DO NOT ASSUME BECAUSE YOU ARE HONEST HARDWORKING PEOPLE THAT THEY ARE!! BUYER BE VERY AWARE! My husband and I want nothing extra, just to be made whole again and that will never happen because we do not have the resources they do. It is not about fairness, it is about what is right and they are so wrong!!
Wven those who read the UFOC do not SURVIVE a Rule that was designed with a stated purpose as quoted below that has not been accomplished. If the purpose of the rule were accomplished, due diligence with killer attorneys would not be necessary. The FTC should have added "by providing them and their killer franchise attorneys with information essential.........."
"The Rule is designed to enable pottential franchisees to protect themselves before investing by providing them with information essential to an assessment of the potential risks and benefits, to meaningful comparisons with other investments, and to further investigation of the frasnchise opportunity."
How does the UFOC or the FDD in any substantial way satisfy the stated purpose of the Rule, as stated by the FTC? It is the Rule that permits the ZORS to go forth and multiply on the flesh of innocents, and is this an ugly truth of capitalism?
Disclosing the cost of failure -Quiznos-UPS Lawsuits
The cost of failure is not clearly disclosed in the UFOC's. The new franchisee who is sure of his/her success never thinks in terms of failure in the process of purchasing a franchise to solve the problem of producing income.
Everyone involved with the sale, to include the regulators and the AFD and the AAFD know this to be the truth and yet the FTC Rule and the UFOC's are designed to hide not only the failure rate of the franchised business plans but also to hide the true cost of failure to the franchisee.
This government subsidy of franchising is undemocratic but the victims for the most part are hidden from view and their voice is weak and unheard by those who might work for change in the Congress.
This is the way of things! When public policy has been developed by special interest groups and supported by government and under law, even if this public policy is undemocratic, unfair, and unjust, it is hard to change the status quo. (Think of slavery, child labor, women's rights, collective bargaining, etc.. and the time it took to change the laws)
A big Quiznos or UPS scandal would go a long way to get the attention of the Congress and the State Legislatures but any true "scandal" that could possibly effect any change in the regulations and laws concerning franchising would probably be settled through "confidential" agreements that hide corporate misdeeds from juries and from the public.
This, also, is the way of things! In the meantime, all we can do is try to spread the word.
Rule and UFOC is RED HERRING AND LICENSE TO STEAL
The UFOC's that follow the FTC Rule are nothing more than Red Herrings that permit franchisors to disguise the actual and known true risk of the products, the business opportunities, that they sell to the public.
The appearance of government endorsement is overwhelming with an SBA Franchise Registry, VA/Vet/Fran advice and discounts, etc... The Franchisors use their SBA Registry presence as a sales tool and the government is pushing The SBA Patriot Express Loan Pilot Program to VETS and their families.
When the government, the SBA, through the SBA Franchise Registry will guarantee loans for preferred lenders at failure rates of 30%, 40%, 50%, 70%, up and down, of first-generation franchisees because the true failure rate of the original franchisees can be obscured from view of the public and the view of the government regulators and the SBA, we have messes like The Coffee Beanery, The UPS Store, Quiznos, CSC, and others to come.
Franchising needs to be regulated at least as well as securities are regulated by the SEC. If this were true, the franchisor-known statistical rate of the failure of first-generation franchisees would have to be divulged under law.
The suicides (in the USA and Austrialia and throughout the world) due to the public policy and status quo in the global economy that works together to hide the actual statistical risk of the investments in a franchised business opportunity are a stain on the "free market" principles of capitalism.
If a franchise that is being sold to the public can't stand without disproportionately sacrificing first-generation franchisees to stand up the network, that franchise should be subject to market forces. Market forces, then, would make it impossible to sell business opportunity products that were unviable and that have high failure rates to new first-generation franchisees. Entrepreneur would have to revise its criteria for hyping their Top 10, etc...
I would hope that the Senate Judicial Committee and the Congress would call experts like Richard Solomon who recently opined that 80% of the new concepts were either unviable or outright frauds. I think that Richard Solomon has indicated that successful franchises are more the exception than the rule.
Richard Solomon, Franchise Remedies.Com. atill offers one of the best deals in franchising. His $1,000 Negative Due Diligence Check might be the best money ever spent by those who are enamored with the idea of a "business of their own" and the false appearance of a "proven business plan" offered by way of a franchisor with visibility in the community.
LET THE BUYER BEWARE --of the FRANCHISOR AND OF THE GOVERNMENT REGULATORS.
UFocked with your UFOC! And Corporate Communication!
Now you got it! Corporate Communication together with the presentation of the GOVERNMENT UFOC and the boilerplate contract you signed makes it possible for the ZOR to lie and deceive with immunity and impunity under the law, until death do you part.
ABA LETS THE AMERICAN PEOPLE DOWN
The ABA has really let the American people down. Why? They have permitted our justice system to get out of balance. If an Association of Attorneys can't work for the people and work only for the big-money interests in this country, what will happen to our democracy.
Is this because the administration in power has tried to kill off the trial attorneys and paint them as the bad guys who make the cost of business in this country so expensive because they defend INDIVIDUAL rights. Is the ABA controlled by money and the big law firms who defend the big American Corporations that can pay the really big bucks for representation to protect and always maximize their profits.
Now we are told that our courts favor business ---even our highest courts ---and is this why the trial attorneys are out of favor?
Our leaders haven't worked against preventing malpractice, they have only worked to brain wash the American people into thinking that malpractice awards are what is wrong with medicine. Have you seen that terrible ads that has been run lately on television? Couldn't society work toward co-insuring surgical procedures so that when mistakes are made by doctors and hospitals, the victims of these mistakes can be fairly compensated, and the mistakes can be admitted.
Instead, we have a system where mistakes are covered up and bad doctors are allowed to practice and the government wants to remove the rights of individuals by keeping the trial lawyers out of the courts and capping awards.
Most of these huge jury awards are reversed on Appeal but you don't read about this in the paper. And these huge awards from juries are because of the "criminal" behaviour of the defendants who engaged in this behavior for "money".
Shouldn't the ABA be out there engaging the American people in a discussion about these problems or is the ABA happy with the status quo ---on both sides of the fence.
It is very difficult to win malpractice awards because you have to have expert witnesses to address the courts and generally if there is a mistake, etc.. it is covered up in the charts and the hospital records, etc.. Doctors who are in medicine because they love it also love the money and they protect bad doctors in their own specialties to keep their own malpractice premiums down. The State Healing Arts Boards that are supposed to discipline Doctors are owned by the Doctors in the sense that it is Doctors who have to assist with the investigations.
If it weren't for trial lawyers who take cases on contingency, the little person who is injured wouldn't have a chance and the Doctors would become even more careless and less critical of fellow doctors that they know shouldn't be practicing. Now, the Doctors and the Hospitals both work for the insurance companies who have the really big bucks and they will fight like hell to protect their profits and Dale and others like him will help them.
The ads are already out there that appeal to the selfishness of human nature. "Don't vote for National Health Insurance Coverage ----it will destroy our system and YOU will get LESS for your insurance dollars" ---We see they already have the ads about state insurance for the children of the poor under state programs, etc.. to defend their selfish position during the elections. The hell with the parents of the poor children ---who cares about the poor anyway. It's their fault that they can't get decent jobs that provide health insurance --like at WalMart or KMart or Sears or Sonic or McDonald's or Burger King, or Subway, or The UPS Store, or Quiznos, or Coffee Beanery, or Applebees, or Denny's.
But, we shouldn't worry, franchising is going to solve the problem for the people and this generation of veterans who are defending capitalism, freedom and democracy in Iraq and those other places the SBA expects to see "the protracted war on terror."
Item 19 ----Constructive Earnings Claim Constructive Fraud?
Thank you Michael Webster for your comments.
Does your last paragraph indicate that Rescission for ommissions and misrepresentations in UFOC's under the State laws is not considered a criminal event, and only an administrative action by the AG of the State for the civil wrong of non-compliance with the UFOC. Do the State Franchise Laws that provide a private right of action for franchisees render misrepresentation and ommissions in the UFOC's or the contracts NOT to be criminal fraud but rather a tort under the State Franchise Statutes for which damages can be claimed if the damages are found to be proximate to the misrepresentations and ommissions?
And now we have the ALE at FTC level. The article I read said that Maryland had an ALE program as well. Does this mean that the Federal Government and the State governments (with ALE programs) will have the power to determine that ommissions or misrepresentations in the UFOC can be cured outside of Rescission, and outside of the view of the general public through the use of a "school" plea bargain?
The article I read in Google said that there had been 14 ALE actions at the time of the writing but these actions were not a public record. We understand the state UFOC's permit the franchisors to sell their business opportunities at almost any degree of failure, i.e. 30%, 40%, 60%, 70% and this is not as violation of either state or Federal law unless there is an ommission or misrepresentation in the UFOC or a violation of the Rule.
It looks like the FTC has moved to further protect the franchisors and make it almost impossible for franchisees to recover under State franchise laws.
If the arbiters can find that Rescissions that have dealt with ommissions and misrepresentations are not proximate to the damages of the franchises, as in the Coffee Beanery Case, what would prevent a judge (or a jury?) from finding that the ommissions in the UFOC weren't proximate to the damages suffered by the franchisees. That is, do they use the franchisees lack of complete due diligence investigation with the Item 20 references as a mechanism to defeat any claim of the franchisee that they were fraudulently induced to contract because the risk was hidden? Are franchisees being set up so that they can never claim that they were fraudulently induced into a contract and that the actual risk of the investment was hidden from them? Is this because there is public policy to legally obscure the actual statistical risk of the investment under the Rule and the UFOC, Item 20, from the naive and inexperienced who do not pay many hundreds of dollars for professional due diligence to discover the vehicles for fraud that are on the SBA Franchise Registry? Have there been any cases to date where franchises have recovered under State franchise statutes or are these statutes primarily used as a vehicle to negotiate out-of-court settlements?
Did I see that someone posted that Piper Rudnick were involved in founding the IFA? Boy that explains a lot. Could the FTC, IFA and DLA Piper, be in any more of apowerful position? No wonder things like this happen. No wonder you never hear about things like this. I can't beleive that these two were able to get this far.
With this kind of tremondous power how does the little guy stand a chance? Blue MauMau you will have to keep us posted as to what happens here. This one is under the magnifying glass right now.
Freedom to Go Bankrupt
So many house buyers decied to sign Adjustable Rate Mortgages (ARMs) so that they could get lower home payments for the here and now. In pursuing their dream of owning the American home they wanted, they assumed the future would be kind to them. And now those rates have increased and those home owners are suffering.
The government has announced plans to spend our tax dollars to help bail out consumers from their bad choices.
Think of all the franchise buyers that do not read their UFOC. Do not worry about their franchise agreement. Don't worry about getting a handle on the hard numbers. Until they get into trouble.
Neil Cavuto of Fox News speaks that life is about choices and the consequences to those choices.
What we are. What we wear. Where we live.
Our choices. Sometimes tough choices.
Nobody else's choices.
The great thing about living in a free country is we're free to be anything we want.
But we are not free to force others to accommodate anything we want.
We have every right to expect people to be decent and understanding.
Most Americans are.
We have no right to force people to pay for those choices.
Because most Americans can't.
The fact is, our wallets aren't nearly as big as our hearts.
There is no room for being cruel in this country.
But there is no money to accommodate every disparate demand in this country.
Because keep pushing the latter, and pretty soon, you won't have a country.
(Click to see video, roughly 1 minute.)
Baby Steps: Franchise Rule
Here's an article regarding New Franchise Rules from the Chicago Tribune, which I believe many BlueMaumau members and guests will find interesting.
New franchise rules called 'baby steps'Risks and rewards better explained before buying inBy Mary Ellen PodmolikSpecial to the TribunePublished May 7, 2007
Jobless, but holding a big check from an employee buyout in 2005, Priscilla Taylor took the road traveled by thousands of downsized managers like herself: franchising.In December, after a year of due diligence and construction, Taylor opened on West Jackson Boulevard the first Maui Wowi Hawaiian franchise in Chicago with a fixed location. She hired an attorney to help her decipher the coffee-and-smoothie company's franchise documents and talked with other franchisees. She came away with the knowledge that fixed locations didn't have a long company track record. Nevertheless, she now dons a Hawaiian shirt for work every day, having spent $34,500 for the rights to open up to three locations."I didn't want to go back into the corporate world," Taylor said. "It was a well-educated gamble. [Franchise] agreements, from what I understand, are clearly written in the favor of the franchiser."New rules from the Federal Trade Commission, however, seek to correct that imbalance. The changes to the federal franchise rule, which had been in discussion for more than a decade, don't entirely correct the law's flaws, but they are baby steps in the right direction, say franchisee rights advocates.
Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!
Death by Government
Here's an exerpt from a November 2003 Article in The Onion that truly exemplifies what a SAD SOCIETY we have become. The headline read:
AMERICANS DEMAND INCREASEDGOVERNMENTAL PROTECTION FROM SELVES
Alarmed by the unhealthy choices they make every day, more and more Americans are calling on the government to enact legislation that will protect them from their own behavior.
"The government is finally starting to take some responsibility for the effect my behavior has on others," said New York City resident Alec Haverchuk, 44, who is prohibited by law from smoking in restaurants and bars. "But we have a long way to go. I can still light up on city streets and in the privacy of my own home. I mean, legislators acknowledge that my cigarette smoke could give others cancer, but don't they care about me, too?"
"It's not just about Americans eating too many fries or cracking their skulls open when they fall off their bicycles," said Los Angeles resident Rebecca Burnie, 26. "It's a financial issue, too. I spend all my money on trendy clothes and a nightlife that I can't afford. I'm $23,000 in debt, but the credit-card companies keep letting me spend. It's obscene that the government allows those companies to allow me to do this to myself. Why do I pay my taxes?"
Read more - If your stomach can stand it!
Now here's a little exerpt from a column written for the Foundation for Economoic Education by Sheldon Richman, editor of Ideas on Liberty. The colomun was written in 2000 and titled:
DEATH BY GOVERNMENT PROTECTION
As Thomas Sowell says, in our world there are no solutions, only tradeoffs. Keep that in mind as we consider the state alternative to market-based consumer protection. Advocates of government regulation assume it is costless: not that there are no money expenses, but that nothing important is traded away when the state displaces the market as the protector of consumers. Yet economists over the last 40 years have documented the costs of government protection. Most dramatic is the literature about the Food and Drug Administration. We now know that government protection kills by delaying the availability of life-saving drugs. Further, thanks to economists of the Public Choice school, we know that bureaucrats, despite the best intentions, confront incentives that are adverse to the interests of consumers. An FDA official who delays a valuable drug because any post-approval mishap would bring him bad publicity is not serving the “public interest.” (See Daniel Klein, “Economists Against the FDA,” Ideas on Liberty, September 2000.) What is true for the FDA is true for the NHTSA, the agency whose airbag and fuel-efficiency mandates and obfuscation have demonstrably cost lives. This agency’s advocates want a bigger budget, more personnel, tougher standards, and more authority to recall tires. But those things are not costless. As Robert Levy of the Cato Institute points out, NHTSA bureaucrats would have an incentive to prematurely recall tires: if they don’t recall them and someone dies (for whatever reason) in a car equipped with them, they’ll have congressmen and reporters breathing down their necks. But if they recall the tires, no one would ever know if anyone would have been killed had the recall not occurred. Face it: there is no perfectly safe tire. Another cost of a more active bureaucracy would be the inevitable delays and added expense of new tire technologies that didn’t meet the government’s standards. Just as the FDA keeps life-saving medicines off the market for long periods (even when they are being used successfully in Europe), the NHTSA could keep revolutionary tires off the road. They might have saved lives, but no one would know and no bureaucrat would be held responsible. The promise of government protection carries an even greater cost: the consumer vigilance forgone owing to the false sense of security the promise of government protection induces. The government cannot actually deliver on that promise—medical licensing has not eliminated quacks—but it’s the promise that counts. Since people generally believe the government looks out for them, they develop an unarticulated frame of mind summed up by the words: “they couldn’t sell that if it was dangerous.” A false sense of security is worse than no security at all. It sets people up to be victimized. If the government stopped regulating—and everyone knew it—the buying public’s vigilance would grow. People would seek out information. Entrepreneurs would respond. Insurance companies would assume a larger role. Private consumer advocacy would expand. Lives would be saved.
Read More to fully understand just how GOVERNMENT REGULATION eats away at our finances and errodes our Freedom of: Life, Liberty and the Pursuit of Happiness!
Believe & Succeed,DaleFranSynergy, Inc.Synergizing Franchising!www.fransynergy.com
Australian Franchisees Fight Back ---Lots of Guts Downunder
Good for you Deanne de Leeuw! You tell it like it is.
Now, you will have to watch your back because they will come after you. The special interests who gain from the status quo of franchising will resist any change. Hopefully, you will be able to rally the support of the Australian people through continuing media coverage, etc...but, don't forget! the big money owns the media as well in most countries and when push comes to shove, human nature is such that people always support what they conceive to be in their own interests, even if it is not right, honest, and ethical and hurts innocents. Unfortunately, when the nature of mankind is incorporated, it often produces great evil in the world because individuals involved in the process separate their personal integrity and value system from the corporate process.
This is not just an Australian problem ---this is an American and Canadian, and UK crisis --and the globalists in franchising intend to bring franchising to the entire world.
Remember! out of the American scandals of the 70's in franchising, the American people were told that they were being given protection under the FTC Rule and the Rule turned out to be TOTAL protection for the franchisors to sell their proven plans at any degree of risk of failure to the American public and with immunity and impunity under our laws for fraudulent inducement.
Bubba Sparky wrote: While there may be no private cause of action under 15 USC 41 et seq, you can individually, or even collectively, sue the franchisor for violations under both state and federal law, just not under the above stated laws. However, your case may become problematic if your cause of action is predicated in whole or in part by something controlled by 15 USC 41 et seq.
Guest responded that he remained confused, so a brief recap (which I have moved to a more on-point thread); my law school professors would wince at the following (and grade accordingly!), but it is a workable explanation:
- To bring a suit, you must have "standing." This means that you are a proper Plaintiff.
- Just because a law is violated does not mean that you can bring suit. For example, if someone punches you there has been a civil wrong (a tort action for assault) and a criminal wrong (a criminal action for assault). You cannot bring a criminal case, since you do not have "standing"; this is why the criminal case would be captioned "People of the State of X against Joe Criminal". It is the "sovereign" (i.e., the government) which brings the case in the name of the "People". You don't see criminal cases as "John Victim v. Joe Criminal" because John Victim lacks standing to bring the action. Similarly, you can't sue because your friend was a victim of a civil wrong since you lack standing; your friend who was harmed must bring the suit himself.
- Some federal laws provide for a "private right of action" which means that a private citizen can sue when the law is broken. The federal franchise rule does not provide for a private right of action, only the sovereign (i.e., the Federal Trade Commission) can bring suit when the Franchise Rule is violated. (Note: automobile and petroleum franchises have different sets of laws with different remedies, we are discussing here all other franchises)
- Other laws (both state and federal) may provide for a private right of action against the franchisor. And there may be "common law" claims against the franchisor.
- In the US, there are 2 sources of law: Statutes (the written laws passed by the legislature) and Common Law (theoretically, custom of the area which has been "found" by a judge and expressed in a judicial opinion).
What Bubba is saying is that there's more than one way to skin a cat, and this odd fixation that people have on the Franchise Rule as the be-all-end-all is too narrow a view.
I would downplay assertions of remediation via a class action: suing as a class is far more easily said than done, and some franchisors use an ADR clause coupled with a bar on class actions, as we have discussed previously on this board.
"And after having personally seen her building, I doubt that she was in compliance with the franchise agreement!" - FranSynergy on Tinker's PlaceFranSynergy, did you really stalk the store of one of our own?? Say it isn't so.
Original constructive fraud protect franchisors
I'm sure that Richard is right. It is the constructive fraud of the UFOC's and the Unilateral Contract that are a package and snake oil that leads franchisees to sign these contracts of adhesion ---because, of course, they believe that they are unnegotiable and a take it or leave it proposition if the prospective franchisee wants to go into business with the brand name and get rich.
Neither the attorneys, nor the government, disabuse prospective franchisess of this misunderstanding.
Except, of course, Richard Solomon will not let you sign one of these killer contracts without warning you.
The franchisees are shown a beautiful picture of a franchise network and lured with profits, etc.., all of which are disclaimned in a government offering circular that ignores any actual known risk statistics of the offering, and immunizes the franchisors from lawsuits. Once the franchisee's signature is put to the contract, the franchisors are home free in arbitration and in the courts. Rescissions for violations of the UFOC are merely to provide the appearance that government is interested or cares about about violations of the Rule. Lots of show business tactics in regulation and the law.
The judges can protect their innocence by strictly enforcing contract law in the courts.
The rules of the game are rigged.
Judges honor my signed Legal Contract
Of course they do. We understand that contracts must be honored because they hold up our economy and the health of the economy of our nation is vital and crucial to our national security.
If Judges did not honor the written terms of contract, the whole financial structure of the nation would colapse. Our markets would be harmed, etc. and we would be vulnerable to our enemies. We understand that regulatory policy is developed to encourage investment in the economy and that the judges must hold up the binding contracts that suppot regulatory policy and our economy.
We also understand that the FTC through the Rule and the UFOC (the Deal) combined with the adhesory contract has permitted franchisors to legally sell duds to the public without making the franchisors disclose the duds to prospective new buyers of the franchise. Apparently, under our current regulatory scheme, it is even legal for the SBA to guarantee loans on these duds for the lenders.
We just recently understand that Franchisors are part of the "paper market" and that their "virtual network empires" are built on the promises of their franchisees in the adhesory contracts. It is every franchisor's dream to become big enough and successful enough that he can go public or draw the interest of some private equity investment group. What the franchisors have to sell are their airtight adhesory contracts that are upheld by the courts ---their paper --- and their Brand name and the profits earned from the brand name. There is no physical empire! The franchisor has no investment in the physical units that wear the brand name. The value of the network is the portfolio of signed adhesory contracts that are honored by the courts and that can be perpetuated into future growth of the network and profits for the franchisor, and those who invest in the franchisor.
But, can an industry that is built on deceiving first generation franchisees as to the known risk of the investment, as demonstrated by the success or failure of the first-generation owners who provide the capital and the cheap labor to build the physical units, deceive the public forever? Can the malice of the contracts and the sacrifice of innocents to this immoral and unethical regulatory scheme be justified or rationalized as policy that serves the public good?
Can't we do better? Wouldn't franchising survive if the failure/success rate (past performance statistics) were disclosed to prospective franchisees before these airtight contracts were signed. The premise of "informed consent" is violated by the DEAL the FTC has made with the IFA and the combination of the UFOC and the contract of adhesion is a kind of constructive fraud that works against consumers of franchises in our nation today.
FTC Conspircay -----The Red Herring of the Rule/UFOC--The DEAL
Gee! Michael! You know that I came to the same conclusions that were indicated in the quote from Professor Spencer (see previous post with quote) that apparently came out of something Paul Steinberg produced in a paper he wrote that was published by Penn State Law Journal in 2004, i.e. Beguilng Heresy: Regulating the Franchise Relationship. I haven't had any luck finding this on line. Could you or Paul help me?
I have been researching for months and months to find something that would confirm my belief, based on good circumstantial evidence, that Item 20 was a DEAL that was struck by the FTC with the Regulators in the late 70's. I couldn't believe my eyes when I read the quote in this very excellent presentation of Professor Spencer to the Third Meeting of the European Network on the Economics of the Firm (ENEF) GREDEG, CNRS and University of Nice Sophia Antipolis, 7-9 Septemer
2006. It was a "catch" for me!
I understand that the status quo of FTC Regulation and the Rule is not a secret in the legal profession and not a secret from the franchisors, and only a secret as far as the "marks" are concerned. The RULE and the UFOC's and the status quo enables predator franchisors to have their way with their franchisees and to move from concept to concept (like Mr. Amos) because they are using the cheap labor and the capital of others who place their faith in appearances and their government. Franchising really needs to be regulated at least as well as securities are regulated by the SEC in the interests of democracy.
I understand that the secret is kept from the franchisees and the general public because if the sun were to shine on the pratices involved, it might be hard to sell franchises to the public without disclosing past and present performance statistics.
I understand the concept of the "greater good" and the necessity to protect the economies of free democratic republics but I don't buy that it is necessary to return to the days of "human sacrifice" to serve the God of Capitalism.
How can I or anyone prove that it was a DEAL when government legalized the DEAL? I fight windmills with the hope that the TRUTH will be product for some media outlet and that some investigative reporter will have the guts and the integrity and the ability to tell the truth about franchising to The American People.
Deferred good faith ----Franchise Disclosure Laws
I think Australia is trying to find a compromise to protect the Australian people but they face the same problems with influence and the concept of the "greater good" that all nations face in dealing with franchising and its place in their economies.
If the premise upon which all regulation or rules and laws are based is that franchising CANNOT stand up to honest pre-sale disclosure of the known statistics of past and present performance of the franchise, we have just more of the same.
Governments will produce wordy resolutions and rules, etc.. to present the appearance of trying to solve the problem of "good faith" in the relationship, but if governments do not act in good faith and require franchisors to fully disclose their past and present performance statistics, this is all just "show business."
Unless governments act in good faith, there is no hope for franchisees to be informed when they make their good faith investments of their lives and their worldly goods in the purchase of a franchise.
"You can't make a silk purse out of a sow's ear" and American Franchise Regulation is a sow's ear, ugly and unworthy of immitation in other free countries, like Australia. Remember! America brought Quiznos to Australia.
The Judge and the Contract ---MBE-UPS
In support of regulatory policy, the judges will always look for those terms that will permit the judge to honor the contract and dismiss the case out of court.
The franchisor has only a paper network ---a virtual business entity -- that is composed of binding contracts. It is the contracts that are sold to private investors or that become public companies that earn profits for franchisor and investors, The franchisors have no ownership of the intangible assets of the networks that wear the brand names. They only own the contracts that enable them to own the franchisees and their assets in success and failure.
If franchise contracts are not routinely held up and protected ty the courts, the paper empires of franchisors are put at great risk.
Got a chuckle out of your “Z-Rube Makes Record Donations . . .” post, Guest (under the “Curves Sues Franchisees . . . “ article).
I’m moving this comment to the Government Regulation forum since this comment is not about Curves.
Z-Rube, you have got to be the most unconvincing person whose path I have crossed. You post day-in, day-out, several times a day on the same subject, that there needs to be legislation to disclose failure rates to franchisees.I take it you're unemployed. You may be posting on other subjects also, but frankly, I am so tired of reading the same old rehash from you that I just quit reading once I realize it’s from you because I know from past experience that you have nothing of interest to say.
Where were you when the different states were recently considering pro-franchisee legislation? Did you take your message to those state legislators where it would have done some good? Did you come up with some concrete examples of how we could make a difference on a subject that you say is important to to us? Did you try to rally us?
No. You didn’t even seem to notice that legislation significant to franchisees was in the discussion phase, even though there was plenty of notice on this site.
By the way, don’t expect people to rally around someone who is only known as “Guest.” Would you be interested in hearing the thoughts of someone running for President or state office (that is, someone who advocates political action) who was known as “Guest”?
Z-Rube, even though franchising is near and dear to my heart, and I am a take-action person politically and otherwise, you have not given me even a twinge of wanting to take action on something you wrote. You’ve convinced no one that I can see. So why do you persist? You are simply a major irritant who gets no respect because you appear to have only a vague idea of what you’re talking about. The more you write, the less respect you get.
If you want to make a difference, may I suggest you read Lou Dobbs’ book, “War on the Middle Class,” or look at some of the very good documentaries, such as “The Corporation”? Dobbs and the makers of “The Corporation” are very persuasive because they come up with facts to back up things that strongly impact people. That makes them very interesting too, and people feel it’s worth taking the time to listen to them. They’ve persuaded plenty of people and that has resulted in action and made a difference.
When you’ve got something to say, you’ll find a lot of people listening. Until then, it would be greatly be appreciated if you’d just go away.
Item 20 Rant and SEC regulation
'Our PHD on this site has suggested that this could be accomplished easily and inexpensively by listing the purchase price and the sale price of all transfers and acquisitions in Item 20 columns. This would then present a clear picture of the viability of the network and the risk of the investment.'
Since I don't know one guest from another, I'm assuming that you are the same guest that stated its an invasion of privacy to list people's names and phone numbers in the UFOC. What is that above? If you sold your store for $1,000,000, would you want everyone is the system to know this? What if you are still in the system and you sell one of your stores, do you really want everyone else to know how much you made off of it? You assume that people would want to disclose this information. I don't know if they would or not, but I probably wouldn't.
If you really want people to know if a system is viable enough, the government should require all systems to show a earnings claim based on a compilation (not an audit) of all stores sales and operating expenses (no debt service included or owner's compensation for passive owners). If a franchisee doesn't submit the information they would then be fined. If a franchisor omits an earnings claim or doesn't include all stores in their compilation then they are fined. Will this be costly, yes, but it would give everyone the information that they would need. The question is would people understand it, some would not.
Would franchisees want to share this information with zors, some no, because they don't report all of the sales. Having been on the zor side, probably about 50-60% of the financial statements we got from zees didn't agree to the sales they reported on their sales reports. Some were higher, some were lower. I left prior to doing any audits of their sales reports to financial statements.
More on your SEC Regulation
From the SEC website:
Purpose of Registration
A primary means of accomplishing these goals is the disclosure of important financial information through the registration of securities. This information enables investors, not the government, to make informed judgments about whether to purchase a company's securities. While the SEC requires that the information provided be accurate, it does not guarantee it. Investors who purchase securities and suffer losses have important recovery rights if they can prove that there was incomplete or inaccurate disclosure of important information.
So, the SEC doesn't read the company's filings prior to them being publicized either, just like the FTC doesn't read a UFOC.
Two Different Countries
"I can't imagine that this would be something that is present in Canada and not present in the United States." - Guest
That's not necessarily the case. The two countries are not exactly the same. Canada has a European style VAT tax. We don't. Canada has socialized medicine. We don't. Canada allows legalized pot. We do not. It is part of the commonwealth. Much more independent, we shunned such ties some 200 years ago. And Canada does not have a history of its college students shooting 30 or so classmates. Students up there shoot fewer college kids.
Different places. What is a social problem in one country is not necessarily in the other.
I doubt if franchising is the same in both countries.
Malicious Use of Process vs. Artful Use of Process
The Artful Use of Process in the Regulatory Scheme that governs franchising can never be proved to be malicious use of process and it is business as usual in the courts.
DD, you are...
...near and dear to me, but have you learned nothing on BMM?
They have no responsibility to be honest about the state of their company or disclose material facts of any sort.
No, there is a prescribed format for disclosure of material facts. It is called a UFOC (soon to be FDD). If you didn't get one, seek rescission.
Why is it franchisees have no protection?
Apart from the Franchise Rule, some states have disclosure laws and some have relationship laws. Also there may be common-law on point. And that's why you should read the UFOC and after you have read it, go and discuss that with a lawyer who deals with commercial transactions (preferably one with some franchise expertise).
zor has no responsibilty when they sell a franchise to be honest and upfront about anything
Again, if you believe the disclosure document was not accurate then you may have recourse. But you have not shown that your disclosure document was not proper.
When someone looks into a franchise they have to take notes of everything the sales person discloses. Make sure you get everything in writing.
Yes, but let's be a bit more specific. Most well-drafted contracts are going to have a Merger/Integration clause. If the drafter knows what they are doing, they will also have a "no reliance" clause to forestall claims of fraud in the inducement, in which case your notes and the eyewitness testimony of the Pope himself will not even be admitted into court.
These are matters discussed previously on Blue MauMau, and ones which you should have discussed with your attorney.
As you know, I am not a fan of the abuse that goes on with merger clauses but there is a reason why they exist and the courts do enforce them (Indeed, one of the problems with arbitration is that the tribunal not bound by evidentiary law may admit parol evidence and negate all that careful drafting).
And the plain language of a "no reliance" clause should cause anyone reading it to have concern if in fact there was reliance on something not in the contract. You don't need a professional license to exercise common sense.
Paul SteinbergFranchisee Attorney, New York City, Ph: 212-529-5400
Good that TSFA won't fold and will fight injustice QUIZNOS
It is good to read that the TSFA won't fold and will continue their fight for justice in a rigged system. I'm sure Bob Baber is looking down from wherever he is (that special room for franchisees in heaven) and cheering TSFA to fight on for justice.
Quiznos unilateral contracts are not bargained contracts and regulatory policy as formulated by the FTC with the IFA has encouraged the use of legal process to deny justice to those prospective franchisees who are brought to believe that the franchise agreements cannot be bargained and who sign these contracts in good faith based on the promises stated outside of contract. The GOVERNMENT UFOC's permit the franchisors to disclaim all of the promises made outside of contract in the signed contract and the signed contract becomes a legal trap from which there is no escape ----that then protects the franchisors 100% in the courts from claims of misrepresentations or fraudulent inducement to contract.
This "artful" use of due process of law should be looked at by the Congress, the Regulators, and the Courts. While schemes may be legal, democracies should not be involved in the endorsement of immoral and ugly public policy that has been passed into law by special interests.
Remember! It was perfectly legal to kill the Jews in Germany and the German judges upheld the rule of law.
ISoldIt qualifies for UFOC
The ISold It debacle demonstrates federal and state regulatory policy wherein the UFOC is merely a license for the franchisor to operate in the state, and not much more.
It is obvious that neither the Federal nor the State governments are interested in the very high failure rate of ISold It who continues to be licensed by the States.
I guess this is why the UFOC-California-ISoldIt had to disclose in their new UFOC that it wasn't a proven plan.
So Rare that it may not even Exist
Franchise retail business opportunities do not qualify to be called investments. The FTC calls them "investments" knowing that they are a divestment of judgement of the naive "mark" who believes that government is regulating franchising in his/her interests.
"My country tis of thee?"
Franchising is Big Business and there are big winners
From the statistics in the article above, we see that franchising is big business that produces great profits for investors.
It is interesting to note that the acorn of the franchisee and franchisor-system empires is the labor and investment of the individual franchisee that is captured in a long-term, unilateral, unbargained franchise agreement that is honored by the courts and upheld in mandated asrbitrations under the rules of the FAA.
It is the millions of individual little business men and women who build these empires and who own the physical empires who produce the great profits for those higher in the chain. Many of these millions of little business men and women work long and hard hours for low pay and no profits under binding and unbargained contracts of adhesion to make these great profits possible.
Thanks for the statistics.
Appetizing Treats for Investors
The writer of this article indicates that franchisors are appetizing Treats for Investors.
The genesis of these treats are the millions of individual franchise owners who sign unilateral and unbargained contracts that are disclosed in government UFOC's and upheld by the courts.
We see from the statistics above that the small business person is doing his part to support big business in America.
Interesting that even ML is in the Pizza business.
Blogging may save franchisees
It is only on sites like Blue Mau Mau where guests can speak without FEAR of retaliation from those with the power to retaliate that the Java Jo's and Cuppy's Coffee issue could be aired.
Sites like Blue Mau Mau are a threat to franchisors who have, up until recently, controlled all of the PR and advertising and hyping of their products with no oversight by government or the public. Reporters like Janet Sparks can't be everywhere all of the time and even Janet cannot print complaints from those who are fearful of identifying themselves, even to her.
The combination of facts that can be verified and comments by guests who vent that they have been cheated provides a service that is available nowhere else for franchisees.
If this is viewed as an unfair threat to franchisors' reputations, please NOTE that franchisors are free to defend themselves and to counter any negative comments with positive comments to advertise their franchise product on Blue Mau Mau.
Please note that Sona, The UPS Store, Quiznos, Cold Stone Creamery, and most of the others who have come under fire on Blue Mau Mau are on the SBA Registry and eligible for "quickie" loans supported by the American taxpayers. Please note that the SBA Default List is only available on Blue Mau Mau and that the states of The United States continue to license the sale of franchise products with very high failure rates of first-generation franchisees.
Please note that it is time to think about a franchisee tea party.
The Careful but misleading Rhetoric of the Business Media
The careful rhetoric of the business reporters supports the myths without telling outright lies. It is obvious that this NY Times Article was just "product" to spin the readers and to protect franchising. How could business reporters do otherwise when they know that the FTC policy is supported by the IFA and the status quo of business in the country. The writer covered himself by warning that franchising was risky and it was a nice plug for Nick and Ed.
Just like the regulators, business reporters tell you that it is risky but as long as nobody knows how risky franchising may be to first-owner franchisees, and as long as no research is produced, and as long as the franchisors can keep this information to themselves, and not share it with new prospects, or the business media, it is business as usual and they don't rock the boat. Who really knows who these 800,000 franchises are and how many of them are original owners, or second and third generation owners, none of whom have never made any real profits and are indentured for the term of their contracts?
I commend Forbes.Com who told more truth than I have seen anywhere else when they published 10 Reasons NOT to buy a franchise. It was so refreshing to see the truth in print from a respected business magazine, but I have always had great respect for Steve Forbes who tells the truth to the American people.
Quiznos has License to Steal from franchisees
Quiznos has license to steal because of unbargained government UFOC-contract that is protected by the strict interpretation of contract law by the courts.
Look at the big picture and then understand what Bob Baber understood. The deck is stacked neatly and it is all LEGAL.
Maybe immoral and unfair but legal.
Implied Threat by DD
Odd behavior by DD if this wasn't meant to be a threat.
Obviously, DD would and should know that only the Franchise World, and not all of them, have heard of this lawsuit, and their customers haven't heard of the lawsuit and even if they did, they wouldn't boycott DD unless they were people of brown color who were asked to do so by civil rights leaders. Why, then, do they create more publicity about this matter with this Memorandum that is an implied threat.
Since franchisors always work to blur the identity of the franchisor and the franchisee because they know that the public doesn't understand that the franchisor has no ownership in the physical units that wear the brand name, they use the terms of the adhesory franchise agreement to silence their franchisees by always pointing out that it is the franchisees' best interests not to damage the brand name because they damage their own asset. And, if they damage their own asset, they are damaging the brand name, etc.. and this could be grounds for termination.
But does DD use the terms of the contract and the threat of criminal prosecution of their franchisees to gain the advantage of getting the franchisee's business for nothing or much less than the business is worth. If this were true, this would be malicious no matter what the color of the skin of the franchisee. Wouldn't it?
What is a Franchise platform?
If you are saying that America introduced franchising and franchise practices to Australia and other countries, I agree.
But, we, perhaps, introduced an exploitive and immoral business practice that can be improved upon. It is obvious that under our regulatory policy, our government has assisted the franchisors in their abuses because they have not required the franchisors to disclose past performance statistics on the franchises that are sold to the public. Our government has assisted the franchisors in obscuring the risk of the investment and the government UFOC is not an efficient disclosure document but rather a red herring that obscures the risk and protects the franchisors 100% from any charges of fraudulent inducement to contract once the franchisee puts his/her signature to the contract.
What was the intention of the Congress in their original enabling language that resulted in the fTC Rule and the UFOC's? The malice that is evident and possible under the current status quo of the law and franchising cannot be overstated.
The American regulatory policy has condoned and made possible the selling of very high-risk franchises to an unsuspecting public and even government even offers guaranteed loans on very high-risk franchises that are offered to the public in support of regulatory policy.
Australia is to be congratulated for trying to study and improve the franchise as a business model that does not depend on the exploitation of cheap labor and cheap capital of middle class citizens who are tricked into signing killer contracts through the alliance of government and the franchisors who rationaslize the abuse and exploitation of franchisses, and legal traps, as being good for business and, therefore, good for the general public.
UFOC's for Fitness Franchises are a Licence to Steal
Just more of the same. Naive and inexperienced investors who wouldn't believe that their government would give a UFOC to a thief masquerading as a franchisor.
But, of course, these poor souls were led into signing the contract from hell, the franchise agreement, that permits the franchisors to steal with immunity and impunity under our laws.
Too bad! So Sad!
No Honest Research ----No Disclosure of Performance
You sound like a nice guy, Nick, but when there is no honest research out there concerning franchiSEE survival and only skewed research and PR confirming franchisor success, etc., and no real disclosure of the actual risk to the franchisee in terms of past performance statistics of the franchisor's first generation investors, how do franchisees have a chance?
Business publication have indicated that prospective franchisees rarely, if ever, read the UFOC and believe that the UFOC represents an unnegotiable standard contract offered by the franchisor. The UFOC acts as a red herring to divert the attention of the prospective franchisee from the material risk factor that is represented by the success or lack of success of first-generation investors. Item 20 is an ineffective and inefficient vehicle on which to perform due diligence and just an artifice that permits the FTC to meet a low threshhold of requiring franchisors to disclose material information concerning risk to inexperienced investors who are looking for a job.
Unfortunately, prospective buyers trust their government and wouldn't believe that they have been set up as marks for all of those hungry franchisors out there. They wouldn't believe that honest franchisors would suck them into ten-year contractual traps while KNOWING that very few of their franchisees make it through the full contractual term. The long-term contracts premeditate and assure that the franchisors can acquire the assets of franchisees in failure for almost nothing, and that the franchisees will be silenced in fsilure when their assets are acquired by third parties for pennies on the dollar.
We seem to have nobody on this site who is willing to recommend five franchises as good investment vehicles.
Maybe you can change this and recommend five franchises that are good investments today based on their past performance and future variables?
I am especially interested in good recommendations because of the Patriot Loan Express Initiative that has made veterans and their families targets of the franchise industry.
Item 20 DEAL supported by IFA-FTC-SBA-FTC-Congress
Just think how hard it must have been for government to regulate franchising without requiring the ZORS to disclose the actual and real failure rate of the first-generation franchisees who would finance and labor and build the physical units that would then rent and wear the brand names.
Almost everyone says Item 20 is confusing and many say the charts are not useful and not terribly helpful but I'm sure a lot of thought went into the design of Item 20 to permit the ZORS to obscure both the failure and the success rate and to provide deniability for the government.
The government of course will say that it has met its obligation to require the ZORS to provide essential information to the ZEES that can be used to assess the risk while helping the ZORS to hide the risk and to hide churning.
Ugly public policy and the long standing status quo of the DEAl made between the regulated and the regulators.
Heads the NASSA. don't be to worried.
Retain DLA, Piper and you will be exempt from all of the rules.
It takes some nerve to head an organization like the NASSA, when The Coffee Beanery is selling franchises to the citizens in Maryland that Cantone is supposed to be protecting.
Franpro you have more honesty in your little finger then Cantone has in his entire body. He will be forever tainted in my mind for what he has shown to be his true colors. If a two bit zor like CB can beat his butt they it did, then don't worry.
There has been a Final Order issued in Maryland for Stretch-Grow.
D&R had said that the Consent Order for CB could be unwould. They were right. The zees in the Stretch-Grow Consent Order were given recision and PRIVATE RIGHT OF ACTION.
The zor violated the Order and are now liable for anything and everything under Maryland Franchise Law.
Maryland could do this to CB as well but------------------------?
Figure it out
Marketing to the Sheep and advertising will get you everywhere. The Fast Food restaurants and their advertising to both kids and parents and their "perks" for families and their published menu that permit families to know how much the bill is going to be, etc... ensure that we "sheep" are more comfortable in the franchised fast food restaurants than in the independents who may not even take our credit card or our check???
Because so many women are working and because "eating out" and "take-out" has become the great American entertainment-pastime for families and for the business community as well, fast food franchising remains popular but increasingly overcrowed in American Communities and the ROI is not what it used to be, in my opinion. If we have a recession, of course, or worse, American familes will have to eat potatoes, and oatmeal, and bread, and skim milk, and worms at home and start community gardens.
The franchisors are loath to give territory protection and the risk for franchisees is greater now than ever. When franchisors can churn and turn and encroach at will under the law and only the franchisees fail, they will continue to turn and churn and encroach to ensure their visibility and their profits.
It took a long time to turn our wonderful country into a "service" economy and it may be that we will not survive as a "service" economy without great pain and political struggle in this country. That's what happens when short term profits and short-term views, and low ethics and low morals allow our legislatures to allow the corporations to destroy American jobs and American futures for the vision of global capitalism and global secular Republics who will feed the profits of the global corporations.
While this may raise the standard of living in some countries, it appears that Global Capitalism will mean a lowering of the standard of living for middle class Americans.
My opinion! Too bad! So Sad! If Franchising is what the government is depending on for jobs, the writing is on the wall. These are PT jobs with no benefits and no future for most employees. These are lousy jobs with long hours for most franchise owners with no future.