Franchising Needs Better Government Regulation

Discussion of legislation and political advocacy regarding franchising.

I do not believe Paul

or any of the lawyers on BMM are idiots.

Richard is right about there are liers everywhere. Even one of our presidential candidates straight out lied to us about her trip to Bosnia.

Michael is a wise person who says it as it is. They form their opinions as lawyers and look at thinks as their profession says to. They detach themselves so they can give their opinions objectively.

Plus if people went to them they will be saved from financial hell.

Carman has studied the UFOC like no one I have ever met. She is bright and I do not question her intelligence.

Until damaged zees do something about laws to protect the hard working people of our country nothing will be changed and our opinions just sound like rants.

We need to acknowlege where we went wrong and fight for what we believe is right. Until we can do something all we can do is warn other's of the bad zors that do not encourgage people and inform people about killer due diligence.and franchise lawyers.

 

 

on April 1st, 2008

Eptness

Guest writes: "likes of Solomon or Webster two equally inept miscreant merchants of the fallacy of due diligence."

Just what is this "eptness" I have heard so much about? 

Michael Webster PhD LLBFranchise News

Posted by michael webster on April 1st, 2008

Anti-Waiver

I recall asking Carmen Caruso about the Illinios Franchise Regulation which deemed it a deceptive marketing practice to make an oral representation inconsistent with the UFOC and whether it trumped the integration clause.

He thought it might, but could not point to any case law on point. 

Michael Webster PhD LLBFranchise News

Posted by michael webster on April 1st, 2008

Political Influence: Misspokenness alert

Paul,

You stated that the IFA does something and that franchisees virtually do nothing, which I agree with fully. But you seem to imply that if franchisees did something then, there would be more influence, isn't that right?

I hope you meant was that the difference between (IFA and non-IFA) influence was the determining factor in using tipping the political process. Wasn't it? Huh?

Political influence is a winner-take-all game just like in Court. To win, you must outspend your opponent. 

But what's the realistic chance of uniting 800,000 people (under heavy incoming) to oppose these the aligned and entrenched interests:

  • all product franchisors (oil, grocery & auto),
  • all professionals that serve the status quo,
  • all financial institutions, and
  • all media outlets.

It would seem to me the height of stupidity to advise facing these battalions in open warfare. 

But it does have some rhetorical utility in confusing, babysitting and blaming the McVictims.

Hypothetically speaking, of course. 

Les Stewart MBA Understanding Franchising

Posted by Les Stewart on April 1st, 2008

Why? About Arbitration and Fairness

I think we are on the same page and talking about the same thing but in different terms.

I agree that Maryland wronged you and owes you an explanation but I still feel that it is federal policy to protect the franchisors and not to take down networks to provide restitution to those who sue for violations of the Rule and/or the UFOC.

If Maryland agreed to limit the damages when they negotiated the Rescission, it would have been an effort to not destroy the CB franchisor and not any kind of personal deal for the administrator who negotiated the deal, Mr. Dale Cantone. If a network is destroyed because of the necessity to make full restitution to those who were harmed by incomplete disclosure, this can also destroy innocent franchisees in the process and government is concerned with the greater
good.

The fact that Maryland can negotiate a Rescission may be tied to the fact that Maryland has a private right of action that is an inducement for franchisors to negotiate rescissions with the State. If these rescissions are not accepted, the party is then returned to his original position but is forced to arbitrate the violations of the UFOC as if there were no Rescission and no action by the State. The federal policy can be seen in the arbitration of your case, the Coffee Beanery. It is federal policy not to destory franchisor networks by providing full restitution for the damages you suffered in purchasing a failed franchise concept, the Coffee Beanery Cafe. The UFOC's and the franchise agreements do not deal with the success or failure of the concepts. The language of the contract you signed with CB may allow the arbiter to determine that you bought the CB while being informed in the contract that there was no guarantee of success and therefore you accepted a 100% risk of failure when you signed the contract, and you weren't justified to rely on the UFOC regardless of the ommissions and the violations of the UFOC that resulted in the state rescission.

CB, in ommitting and misrepresenting information in the Item 20 columns violated the UFOC and Maryland State Law and the State negotiated a rescission. You say that CB's UFOC is still in violation of Maryland law but that Maryland has permitted them to continue to sell franchises in Maryland. Normally, franchisors are allowed to correct their violations of the UFOC's and continue to operate in the State. The states are interested in whether or not the franchisors have complied with disclosure laws and not interested in the success or failure rate of the franchise that can be investigated by the prospective franchisees through interview of Item 20 references BEFORE the contract is signed.

Both state and federal government are interested in promoting Commerce and they use their regulatory powers to regulate without inhibiting the free markets.

My point is that Item 20 enables franchisors, especially the large and well known franchisors, to obscure and hide the failure rate of first owners, first-generation franchisees, in the transfer columns of the UFOC's. This, then, permits these franchisors to sell unviable poducts because they can stand up their networks on the backs of their failed franchisees whose assets continue to serve the franchisor under second generation ownership, etc....

If the reasons for the Item 20 transfers and the terminations were required to be disclosed in the UFOC, or if resale prices of transfers were revealed, this would present a clear picture of the viability of the investment in terms of success and failure and possible return on the investment to a new investor. As it stands now, a clear picture of the viability of the franchise for the new investor is not disclosed and it is up to the franchisee to try to ascertain the viability of the franchise through interviews with strangers who might or might not tell you the truth for many reasons. Many of these ex-franchisees are silenced with confidentiality agreements. The FTC itself admits that they know that franchisors often pay for good references, etc... The FTC and the franchisors know that most prospects do not do full and complete due diligence on the Intem 20 information and that inexperienced investors often mistake the sale-transfers that are complete failures as successful sales in which the franchisees sold their units at a profit ---and now and then this is true!

I hope that the Arbitration Fairness Act will be passed and that franchisees will get some relief under the law but I still believe that there will be many more victims of franchising until franchising is regulated at least as well as securities are regulated by the FTC. I don't think the current laws protect franchisees from making high risk investments that destroy them financially and emotionally. I believe that you indicated that Coffee Beanery is still on the SBA Franchise Registry and this makes my point for me.

I know this has been a terrible trauma for you and I respect your courage in fighting to right the wrong that has been done to you.

on September 27th, 2007

Right Paul ---The David Frenches wipe the floor

You know why the franchisees have NO lobbying effort.

The nature of franchising and the nature of the franchise agreement keeps franchisees separated from each other. Franchisees are busy trying to get to breakeven in the beginning to protect their investment and by the time there is trouble, it is too late for the franchisee to fight back.

Franchisees always face the conflict of harming their own asset from which they are trying to make a living if they criticize their franchisor ---who has the discretion in the terms of the franchise agreement to punish him for defaults ----that are interpreted by the franchisor loosely under the franchise agreement ----that permits the franchisor to steal your business if you are "defaulted" out of business and dead in the water.

The blurring of the identity of the brand franchisor with the chump franchisee always helps the position of the franchisor. Those who know what is going on in the Congress play dumb because they are afraid if they regulate franchising, it will negatively affect the economy.

Franchisors, until lately, haven't had to recognize independent franchise organizations and have nominated their own franchisee representatives with whom they will deal on the terms of the contract that always favor the franchisor and his profits.

The deck is stacked but a lot of franchisees don't realize this. They are too overwhelmed trying to survive. The ABA and the AAFD and the AFA don't educate franchisees to the constructive fraud created by government regulation. Obviously, they have given up and are willing to compromise by pushing "relationship" issues and legislation and fairer contracts.

Does this mean that these groups believe that franchising as a business model cannot survive if there is true disclosure of performance statistics on a unit basis to new buyers of the franchise? Does this mean that these groups and you, Paul Steinberg, don't believe that franchisors of the same or similar concept within a sector should have to compete with each other through honest disclosure to capture the cheap labor and capital of the franchisee?

If franchise associations would approach the government for better regulation of franchising, could they be successful? Would franchise associations do better approaching the government, or contributing to organizations like the AAFD, to lobby the government for fairer disclosure and fairer relationship contracts in franchising, than by approaching their franchisors? I think so! I think franchise associations would do much better with a Paul Steinberg or a Richard Solomon lobbying the Congress for them.

Why don't franchisees do this? Again, it is probably money. You could join the Brown Board Association for $30.00 but the BSA needed $300 a month to take the matter of The UPS Store unviability to court. Franchisees really do not want to go to court and do not want to fight with their franchisors, they just want their businesses to succeed and they want to realize profits on their investments in the Brand Name. If they tear down the brand name, they are damaging their own asset!

It is not just the franchisors who lobby the Congress; it is the banks and the lenders, the developers, the construction industry, the landlords, etc... Franchisees would have to gather a heap of money to fight this lobby in The Congress of the United States.

Reality and Catch 22!

on April 1st, 2008

You don't know what you're talking about

Mr. Cantone isn't Tony Soprano. He doesn't have the power that you suggest. He is as bound by policy and procedure from above as any other government official.

Since you obviously haven't the slightest idea how state agencies operate and what they are there to do, you ought to consider targeting your comments to something you may know about.

Franchisees who complain to state agencies are supposed to have their own representation, the quality of which is up to them to determine. Mr. Cantone is not your lawyer and does not represent your private interests, The public interest is not the same as your private interests.

Mr. Cantone also can't come in here and tell you what you ought to be told, so I'm telling you. You have no idea what you are saying and you sound like a complete bozo. 

Richard Solomonwww.FranchiseRemedies.com

Posted by RichardSolomon on September 12th, 2007

I understand the difference ---Dale Cantone needs to explain

The difference with the CB Rescission that DLA Piper negotiated with the State of Maryland is that it indicated that if you accepted the Rescission, you gave up your right to private action in Maryland Law and the other rescissions don't indicate this. I believe this needs to be explained but obviously, this is the only way that DLA Piper would agree to pay anything at all to the franchisees. The State would have had to take them to court, etc.. and apparently, this is not State policy.

You didn't accept the rescission because you thought you would have a private right of action under Maryland law, and/or that CB would offer to settle with you before arbitration. You indicate that Dale Cantone encouraged you to send in your arbitration fee and it may be that he thought that CB would offer to settle with you and didn't realize that the Maryland Rescission would be completely ignored by the arbiter.

Dale Cantone is subject to policy decisions and it is federal policy not to provide two bites out of the apple, in my opinion.

I understand that you would be angry with Dale Cantone and I do think all of this needs an explanation. But, if the truth is awkward and difficult to explain, I'm sure that they will just wait until you and your attorney go away!

You have to understand that Maryland may have allowed CB to amend their UFOC in Maryland and that they don't care if you bought a failed "proven" franchised business opportunity. They only care that CB is in compliance with the Rule and the Maryland UFOC. If they are not and are still selling franchises, this is a fire and not just smoke!

I wish you good luck in getting to the truth.

on September 12th, 2007

UFOC is a license to steal and not much more --Bull Scat

You protect the current regulatory rules on franchising because obviously you make your living in or around franchising and just write off the thousands who are sacrificed because they don't do their due diligence with experts.

Go out on the Internet on Google and read Robert Purvin's comments to the FTC about the Rule and understand that this insider in franchising and the former Chairman of the AAFD complained about Item 20 to the FTC ten years ago and noted that the UFOC and the Rule was really a mechanism which together with the adhesory franchise agreements protects the franchisors from charges of fraudulent inducement. I think you know that the naive trust their government and don't understand that the UFOC together with the Franchise agreement were designed to protect the franchisors and not the franchisees. They don't understand that the actual franchise agreement is in any way negotiable and the government UFOC's and the FTC Rule doesn't clarify this misunderstanding, apparently, in a further effort to help the franchisors who use the carrot of profits, etc... together with the UFOC's to trap franchisees into long-term contracts from which there is no escape even if there are never any real profits.

There are no statistics and no research on first-generation franchisee success and on the completion of the long-term contracts and no statistics on ROI for franchisees, etc.. The cooperation of the IFA and the FTC and the business community to obscure the risks and to ignore past performance statistics that are known to the franchisors is a violation of the trust of franchisees. The cooperation of the SBA who will guarantee loans for franchises with very high failure rates who hide these high failure rates in the transfer columns of Item 20 of the UFOC must be bad fiscal policy.

I think you know that inexperienced prospective franchisees often mistake the visibility of the franchise in the communities of our country as viability of the franchise that is offered for sale and don't understand that the transfer columns are obscuring complete failures of ex-franchisees.

I think you know and understand that the government UFOC presents the contract as NON-Negotiable and that most prospective franchisees do not know or understand that the contracts are in any way negotiable and in established networks, they aren't.

This cooperation of the FTC with the IFA to set up naive and inexperienced franchisee prospects who don't spend scarce resources to perform due diligence and who are provided only a weak and ineffective and inefficient Item 20 on which to do their due diligence ia an American disgrace and a betrayal of those middle class Americans who buy franchises to replace their jobs and their incomes.

Sorry, but I find no substance in your weak defense of the indefensible but I understand that all the parties involved in franchising; the franchisors, the advisors, the brokers, the attorneys, the sellers of franchise, whomever, and the government is served by the status quo of franchising that feeds the economy and the profits of all but those franchisees who are sold unviable franchises with high failure rates that are obscured in the UFOC's.

You all agree that "the end justifies the means" and that those who are sold franchises with high failure rates of first generation franchisees are sacrifices to the status quo and the ineffective UFOC's. The FTC uses weak language in the disclosures, such as "if possible" show your ..........knowing that scarce resources will prevent thousands and thousands of prospects from showing their contract and papers, etc.. to an Accountant or Attorney, etc... They indicate that "franchising is complicated" instead of indicating that is is risky and they require no concrete information be disclosed concerning the performance of the franchise itself. The UFOC is a red herring that deters the attention of the prospective buyer from the most important material factor concerning the risk. This material factor is the franchisor-known statistic of the success or failure rate of first generation franchisees who provide the cheap labor and the cheap venture capital to build the physcial units that wear the brand names.

Franchising needs to be regulated as well as securities are regulated by the SEC. If franchising can't stand on its own merits and can't withstand true disclosure of the success or failure rate of the first owners, the first-generation franchisees who, in failure, lose everything, then those franchisors with high failure rates of first-generation franchisees should be subject to market forces and fail.

on September 29th, 2007

You don't know what you don't know!!

If you are not told by the zor what true due diligence is how do you know? If your lawyer doesn't explain what due diliegence is in franchishing how do you know what to do. Most of the zee's I talked to claim no one explained to them what due diligence is. How bad is that???

on February 8th, 2008

You don't know what you don't know!!

If you are not told by the zor what true due diligence is how do you know? If your lawyer doesn't explain what due diliegence is in franchishing how do you know what to do. Most of the zee's I talked to claim no one explained to them what due diligence is. How bad is that???

on February 8th, 2008

But wait what about the Item 20 Ranter/Carman conspiracy?

If I click my heels three times can I have the conspiracy be true? 

The Truth Shall Set You Free!

TIF

Posted by Truth in Franchising on November 28th, 2007

So sad that zors can take zees money with government help

The government is as evil as the zors. It is so sad. It's an American tragedy and we are exporting it around the world stealing even more money from unsuspecting victims who just want to feed their families.

How do we stop the great evil that is franchising? Should we outlaw or put the IFA under government supervision?

on February 24th, 2008

Guest . . . Paul's historical perspective . . .

I'm confused. Is your comment in reply to "Franchise Regulation" by Guest, or to Les Stewart's "Why 'bad' Decisions . . ."?

Denise

on March 4th, 2007

Franchise Agreements are Similarly Deceptive

But think on this, 20 year ZEE! Most potential franchise buyers are looking for a solution to the problem of providing income to support themselves and their families. There are only as few rich people who do it for a lark.

When job growth is slowing and good jobs are hard to find, franchising picks up. FranData and other PR people even indicate that franchising picks up in slow economies. These same people say that franchising has brought the American economy out of many recessions since 1976 when franchising was regulated to protect the franchisors.

Certainly, there is material on the Internet and in Book Stores but when people are looking for a job and thinking that as franchise is the solution, they are not looking at negatives. This makes them particularly vulnerable and they do not do any due diligence looking for negatives. Most of the information on the Internet is positive and pushes franchises and franchisors who can use Press Releases and their UFOC(FDD) to imply viability and government endorsement.

You will admit, won't you, that some franchisees are stuck at breakeven the entire term of the contract, sometimes with low pay and never any profits, if they can't pan their franchise off on some other person who doesn't due killer due diligence. I would bet that there are more indentured franchisees than there are successful franchisees who realize a profit.

You were one of the lucky ones but in the end, they got you because of the contract that you signed and because they no longer needed to use you.

And, you know that they sell franchises as the American Dream --- a business of your own ---and suggest that there will be only success and only mention lack of success in the binding franchise agreement. You provided capital and cheap labor (your employees) for all the years of your association with your ZOR but in the end you were no more than an expendable resourse ---isn't this true? They could make more money elsewhere.

on February 8th, 2008

Re: Item 20 Ranter still can't name even 5 good franchise concep

The same question was posed to you and you, an advocate of franchising, refuse to do the same. You should be coughing up five names if you can.

best regards-

NOT the 'Item 20 Ranter'.

on October 6th, 2007

Paul you are not confused...

Les is irrational.

Posted by The glass is... on March 4th, 2007

Up Chuck the Useless, Adopt a Market Solution

Paul,You agree (somewhat) with my statements but then you disagree (somewhat). Is it, like, 49:51, 40:60, 70:30? I'm confused.One Fat ExampleLet's take one example (only one of several hundred) unique franchise business risks: liquidated damages. From your previous posts, you had stated that you know of zero franchisees that were aware of this. I think we would agree that it is a material investment risk (ie. Honey, don't forget to bury the extra $100k in the backyard...)Since this is a fairly recent innovation, who bears the bulk of the duty to disclose exactly what these clauses could mean to your life savings? Is it the duty of:

  • the candidate,
  • franchisor
  • franchisor associate or
  • candidate's counsel?

The probability of that franchisor claim being successfully forwarded is x% but for that percentage, the franchisee will bear 100% of the weight.What's wrong with finding out what the x% is? Of course, there are those that would argue that real purpose for the liquidated damages claim is keep the hapless hamster on the opportunistic franchisor's wheel. Comparable HazardsAs a consumer, I am not expected to know the detailed toxicology (ie. LD50, etc.) of DDT, asbestos or PCBs. Medical science has provided us these facts. Policy makers have decided when the benefits to our society are less than a product's costs. Without accurate information on the incidence of opportunism, all public policy devolves into he said :: she said polemics.Without accurate information [rooted in the digital- rather than the 19th-century age], truth is defined subjectively (based on power) and not objectively (the scientific method).Less experts, please. More franchise business risk facts.Private LawThe AAFD has been doing exemplary work at establishing what quality means. This is what I mean by private law: the establishment of a standard, enforced by an industry.Les Stewart, MBAIndustry Investment AnalystFranchiseFool.com :: the Wise learn to say No

Posted by Les Stewart on March 4th, 2007

Action --Not Condoning

I agree with all that you say. I hope it is true that something can be done and this is why I post on blue mau mau with the hope that a few voices might become many voices and that our Congress will do the right thing and that the FTC will open their minds to more effective regulation of franchising.

When you research the history of regulation concerning franchising, you find, however, that the franchisor lobby has been successful in preventing any federal legislation that would really inform and protect franchisees from predator franchisors. This has been the case for so many years in the Congress but, perhaps, with the new Congress, there would be more minds open to really effective legislation and regulation of franchising.

If franchising is valuable and necessary to our economy and if American franchisors are going to colonize the world, it would be in our interests to treat franchisees equally through new laws passed by the Congress and the States. If we are to be a beacon of freedom and democracy in the world, we shouldn't send our predator franchisors out into the world to further alienate world opinion.

It is part of the American dream to believe that one person can make a difference and if many join together to lobby the Congress for just laws, even if there isn't a victory, there is a victory in that people join together to do the right thing.

Thank you for your encouragement and your truth that I recognize to be the truth.

on April 12th, 2007

Carman/Item 20 Ranter I believe you are an idiot!

Plain and simple you are the biggest fool posting on BMM. You have no facts just unsubstantiated and malicious opinions. 

The SBA Registery is simply a process and procedure for expediting loans and if you are stupid enough to think that being on the SBA list is an endorsement then you are more of a rube than I could have imagined you to be.

In conclusion please stop wasting everyone's time with your idiotic conspiracy theories 

The Truth Shall Set You Free!

TIF

Posted by Truth in Franchising on November 30th, 2007

Hey!

Everything is about Item 19, 20 and the FTC! Why do you think gas is so high? Item 19. How to make peace between the Israelis and Palestinians? More government regulation in franchising. The problems in Darfur? Duh - the FTC! The protests in Tibet? Okay, so the Dalai Lama may or may not be involved, but you can bet your knickers the SBA is involved!

Am I, and Carman, the only ones that see this?

on April 2nd, 2008

yes the FTC punished me for speaking out!

They put superglue between my fingers while I waited for my beer & wings at Applebee's, set a paper bag of dog poop on fire outside my door, gave me a wedgy and a wet willy in a darkened bathroom at TGIF.

They even signed me up for magazine subscriptions that I did not want and registered me as an interested franchise buyer with every franchisor on FranchiseGator. Oh the horrors of what the FTC goons can do to whistleblowers.

Beware, be careful and be on guard!

on August 27th, 2007

Noise

Is right. TIF you will not advance the franchisee. I don't think you would hurt us , we can only help our selves.

As long as the zee continues thinking that we are victims and that change is hard if not impossible, we will continue to be victims.

Not me. I will fight to the very end for what is right and to right the wrong that has been done to me. My fight is a statement of not declaring defeat because the other side has more toys.

The one with the most toys in the end wins. No matter what each side had at the start.

It is also important that in the end I can look at myself in the mirror and say "I did everthing I could."

I won't post and cry about what has been done to me. I will stand up and fight, and they will know I was there when its over.

on October 13th, 2007

The Fisher King

"The story of the Fisher King is the chronicle of that part of us wounded in the great development in other spheres that occurred in the twelfth century. Science, individuality, a new sense of freedom, romanticism - all of these were taking on new power and definition at this time....

It was a wonderful explosion of new human faculties, but cost a heavy price. The story of the Fisher King is the story of that wound that fell principally on the the feeling function."

- The Fisher King & the Handless Maiden, Robert A. Johnson

Les Stewart

on February 9th, 2008

I disagree with this!!!

I never have been lazy in my life. I raised lots of children on my own. I believe it is lack of support from the zor. Many of my customers asked , "Where is your franchisor??" He should be here helping you. Is buying a franchise not for support and direction? Or is strictly to collect your hard earned money?? Does it stop with them taking your money? The bad zors over inflate the price of everything. That is not good. You have no choice but to buy his things for your business. Zee's should have the choice of buying through the zee or directly from another company. It is alot cheaper. It is the best interest of the zee to keep his cost down. It seems the zor doesn't care. If our zor cared it would of shown in the build out that was ultimately our demise.

on February 9th, 2008

Many franchisees may not share your point of view

Dear TIF:

I suspect there are many failing Quiznos, UPS Store or Baskin Robbins franchisees (by way of example) who do not share your point of view. Would any of the downtrodden franchisees of the world care to chime in?

on January 31st, 2008

I wish there was a title company to go to in franchising!!

It would solve many problems for the zee. But then we wouldn't need a franchise lawyer would we? A third party who is neutral to advice the zee . Like title companies!!!

on February 9th, 2008

lawsuits were more than likely legitimate and very well-deserved

TIF said: “…The law from my understanding is very similar to the Wisconsin relationship law that has resulted in a hundred or more lawsuits.”

Response: If true then said lawsuits were more than likely legitimate and very well-deserved.

TIF said: “…Furthermore the Rhode Island law may be unconstitutional.”

Response: Unlikely. TBD. If so, RI will fix their legislation but not discard it.

TIF said: “…I will tell you that franchisors may start charging higher fees in states that cost more to do business in…”

Response: But not more than the market will bear. That said, at least the franchisees will be protected from losing their life’s savings due to an overly aggressive and patently unfair franchisor termination or nonrenewal.

TIF said: “… simply not do business in that state and/or run only company units in those states.”

Response: Preposterous. If there is money to be made from franchising then franchisors will franchise. Period.

Comment: How long have you been on the (pro-franchisor) IFA’s payroll? You should change your logo to: My Distorted Truth in Franchising (MDTIF)

on January 31st, 2008

Don't Move On. Take A Stand

That's BS. At least one franchisor, Quiznos, has swindled its franchisees - the latest rip-off is the poblano peppers for the new sandwich. Q is charging franchisees just under $50 for 12 pounds of frozen peppers - local produce suppliers in most parts of the country will sell 12 pounds of peppers for half that.

It's just another example of how Q takes what it can from franchisees; overcharging for equipment, food, and supplies; and issuing predatory coupons with no reimbursement to franchisees. Those who have been financially ruined shouldn't just chalk it up to experience and move on. They should be online and in conversation telling anyone who will listen just what a pack of rats, thieves and liars are running Quiznos.

Quiznos is a rogue business, a rabid animal bent on siphoning the wealth out of franchisees and churning the bankrupt stores to lure in more prey. Those who run Q are responsible for thousands of bankruptcies and at least one suicide. The Schadens, Greg Brennenman, Emmett, and the rest need to be exposed for what they are and those who have lost everything have an obligation to stop them, not ignore them.

on February 9th, 2008

Good Franchisors

The good franchise systems have stay on the sidelines, been with the IFA or opposed relationship franchising.

If and when the flood of franchisee claims of abuse reach a fever pitch, then unfortunately many of those good franchise systems will get washed away with costly regulation.

Be a really good time to have some type of alliance with the AAFD, in my opinion. 

Michael Webster PhD LLBFranchise News

Posted by michael webster on January 31st, 2008

RI law protects franchisees

The RI law is constitutional. The only question is whether it can be retoractively applied to franchise agreements signed before it was enacted. Only Zors who want to breach it by acting unfairly will need to worry about that.

The RI law just increased the value and financeability of every franchisees' business in RI. How's that for doing something?

A franchisee cannot be arbitrarily "fined" for alleged breaches, or forced to knuckle under with no right to cure (or face defending a federal lawsuit with a deman to pay the Zor's legal fees for a frivilous case). If a Zor sues a Zee now, the Zor better have a provable case BEFORE making the decision to terminate instead of trying to backfill if a strong Zee won't back down. It leveled the playing field.

Regulation here is not going to increase the cost of anything, and it will only promote lawsuits where the Zor decides to sue and the Zee defends itself. The lawsuits in in Wisconsin before the statute were settled--now they get fought. They didn't increase, they just get battled now. Zees don't want to litigate, they want to operate; this is why the law is necessary. Who has the big in house legal dept? Not the Zee.

on January 31st, 2008

Yes avoid franchising until the laws are changed!

To be honest as a former zee we had hoped to have our own business and make passive income for our retirement. It turned into a financial nightmare. The zor is out to take your money and does not want you to make money. (Good zors would want their zees to succeed.) Like a very wise lawyer said to me most are bad. Our only hope is to fight together so the people in our government would change the laws to protect the people who have saved all their lives to open a business of their own. (Which a franchise isn't your business- another lie.) Things will not change until zees from all the companys band together and try to get a committee together and tell the government what happened to them. Getting our government's attention should be our first goal. There is strength in numbers. Until we stop talking about it and actually do something,  we will not be heard. In the mean time people should never invest in a franchise. We need to get united. If you have connections with the press get a hold of them and tell them your story. I have personally warned family, friends and aquintances of the evil doing of the franchise world. Tell everyone. Seek counsel. In the mean time all the zees from our franchise are trying to get well. (Get out of financial hell.) We cannot help others util we make ourselves whole again. I am still grieving and many times I get angry. (Which is part of grieving.) A wise man said to me this week end that the best revenge is to live well. Allow yourself to grieve but still take care of business. We need to get ourselves out of financial hell and fight. Until abused zee's get together we do not have a chance. Never give up. Remember there is a reason in movies and in many stories the bad guy always looses in the end. I don't believe our stories will be any different. When people are confronted with the truth many times the only answer is it is your fault. That is what zors do. They know what they've been doing to gain a buck. By misrepresentation, price gouging, puffing, non-disclosure they are looking to rob you and take whatever you have. Yes the government allows this awful thing to take place by allowing them to have UFOC's that protects them. The average person doesn't understand this. Even in our case we had our lawyer review the UFOC. If no one guides you with proper councel how would you know what to do. In the last 4 months I have been doing what they call killer due diligence. In the last three days I haven't spent as much time with this. But by studying here on BMM I believe I understand what happened to us. What I came up with yes we should of gone to a franchise lawyer instead of the dead weight of a lawyer that said everything was fine. Instead of guiding us to a franchise lawyer and our CPA, he said nothing. So get referrals about lawyers. Do killer due diligence on the counsel you seek. I believe people do not understand the depth of killer due diligence before you buy into a franchise. I spent 12 hours a day studying what I know now. Time to take action and make myself well and continue to encourage the people who have been thrown into financial hell and give them hope. Things happen for a reason. Am I more cautious? Yes. Would I trust business people so easily? No. Do I have a plan of action? Yes. I agree with Item 20 ranter the risk factor should be disclosed. Not just that it is a risk. But the percentage of the risk. The truth to do do proper due diligence before you buy a zee takes a long time. Never buy it because you like the product. Never sign because the area directors are charming. Protect yourself until the laws change and never buy a zee.

on February 28th, 2008

Greater good should be changed to the very wealthy!!!

What made our country great is the middle class. The middle class is dissapating and our country is going to be the have or have nots. Peasants and the rich. It is the very thing that made our country great that are targets of these vulgers. It is about power because the very rich have the money to protect their best interest. Please stop saying greater good. Change to the very wealthy. In my opinion the middle class is the greater good. We may not have billions. But I know I personally would never hurt another fellow human being so I can personally gain financially. I am out to prove that I can live a good life and do and have the things I want by never hurting anyone. In other words I can be successful by living by the golden rule. "Do unto others as you would want them to do unto you."

on February 28th, 2008

I didn't get Do Diligence's endorsement!

Oh the horrors of my despair!

on April 2nd, 2008

I bet you

she has many people's endorsement. Look at all the LAWSUITS! Are you in denial of what's going on in the world?

on April 2nd, 2008

Regulation Forum

"Maybe we need a new thread to discuss the role of the regulator " - V

Good suggest, V. This discussion isn't quite appropriate for "defunct franchise concepts".

There's a robust forum thread about franchise regulation, which is right here. And since you are anonymous, let me know if that is not enough. I can create a new forum. (Members can create forums.) If so, give me a title and description.

Frankman

P.S. As a favor, might I ask to tone down the whole virgin / whore thing in the titles? You never know who might be looking over my shoulders and thinking that their boss is an Internet perv. And if that weren't bad enough, my wife at home has been wondering what I've been doing late at night while cackling at the computer. Don't want to give the wrong impression.

on June 8th, 2007

I would happily agree with that if....

we could galvanize these FranWads into doing intelligent and competent things to protect their own interests before they piss away everything they own in the world.

If these FranWads were some minority or otherwise deprived in some politically au courant manner, they would get a lot of programs to protect them.

But, again, you are correct in that they won't be militant, and they won't take cohesive group action - like fish in a barrell, they await the pickling brine of death.

When I think of what black Americans did to get the civil rights act passed, and what the women declined to do and didn't get the ERA ratified - it shouldn't be that hard to figure out that the FranWad whiners require intervention by the FTC.

If the FTC did something for somebody - anybody - I don't care who - maybe I wouldn't urge enforcement action. But their level of effective activity on behalf of anyone is so pathetic. Providing the FTC with a budget is an insult.

--

Richard Solomon, FranchiseRemedies.com,  has 44 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Posted by RichardSolomon on December 9th, 2007

I bet you no one

in the world has studied the UFOC like Carman. Not even you!

on April 2nd, 2008

Dale Cantone and Administrative Action ----Why did he Cave?

There has to be some explanation of why DLA Piper was able to negotiate a rescission on behalf of the Coffee Beanery that required the franchisees, D&R, to GIVE UP THEIR PRIVATE RIGHT OF ACTION if they accepted the Rescission. The terms of the rescission would not have saved D&R from bankruptcy and, therefore, they wouldn't accept the terms that required them to give up their private right of action. We see, from researching other Maryland Rescissions, that franchisees were NOT required to give up their private right of action under Maryland Law if they accepted the rescission. Only the Coffee Beanery Rescission was diferent, why?

What right does a state regulator have to negotiate a rescission and consent decree, in which the franchisee who has been harmed isn't present or represented, that requires the Maryland franchiss to give up their right to a private right of action under Maryland law if they accept the Rescission. How can this be lawful? If D&R had been permitted to accept the Rescission and RETAIN their right to a private right of action under Maryland Law, they could have accepted the rescission and then have gone directly to court. Instead, D&R indicate that Dale Cantone encouraged them to submit their arbitration deposit and to arbitrate as a means of recovery?

As we see, this was a trap for D&R who not only lost in arbitration but were found to be responsible for the costs of the arbitration. Was this a message from the federal government?

Dale Cantone is head of of NASAA, a private organization of volunteers, who work with government to protect the public from fraud and who work with government to formulate public policy. The DEAL of Item 20 was made in the late 70's and all of the people involved today in the FTC and and state government and NASAA inherited a system and a status quo in which the actual material risk of the investment in a franchise, as demonstrated by the failure or success of first-generation franchisees, could be obscured under State UFOC's.

Rescission is an administrative action. I don't know how the Maryland State Franchise Relationship Statute treats ommissions in the UFOC that are violations of the the UFOC and the Rule. Is it necessary to prove in court that the ommissions were fraud and is it necessary to prove that the fraud was proximate to the damages suffered by the franchisees? Is the concept of a flawed business plan with a high failure rate every arbitrated? Is the concept of hiding the risk through ommissions in Item 20 of the UFOC ever arbitrated.

In my mind, it appears that CB did not fully disclose in Item 20 and made misrepresentations that obscured the risk of the investment. That is! If D&R had known that most of the Cafe Concepts were failures, would they have invested in the franchise? I think not. Item 20 obscured the risk of the Cafe Concept that was mixed in with the other CB concept.

And yet, a federal arbiter completely ignored the Rescission and treated the ommissions in Item 20 and the other misrepresentations in the contract as technical oversights that did not contribute to the damages that D&R suffered because of their investment in a flawed and unproven franchised concept. Was the arbiter aware that most of the Cafe concepts had failed? Is fraud ever arbitrated or are misrepresentations not considered fraud in arbitration?

Do you understand that the States issue UFOC's to franchisors who have very high failure rates of first-generation franchisess that cas be legally obscured in the UFOC in Item 20? Do you understand that the SBA guarantees loan for franchises that have very high failure rates? The FTC and the State AG's appear to be only interested in whether or not the franchisors have complied with the disclosure rules, and if they have complied, they appear not to care hnow high the failure rate is, or how low the success rate may be.

Somehow, The CB matter, if not defeated, may have opened a can of worms the State and Federal Government does not want to open. My opinion!

We wait for the next chapter.

on September 14th, 2007

Too theoretical to be of any use

The FTC needs to wallow less in theory and get off its arse and do something.

But I also don't buy the argument that people are being lulled into believing they have protection. That is sheer stupidity. People are being lulled into believing that they know what the hell they are doing when they invest in franchises. The only cure for investment stupidity is mass failures and dead investment bodies lying about everywhere you look. OK - we now have that! Having that out there for everyone to see and smell, there is no excuse for continuing to drink Draino.

If I read all the crap you read, I might believe that theoretical issues underly the difficulties. They do not. Toporoff's position is the same as any lazy government agent who doesn't want to bother with having to work for a living.  Any bozo can concoct a statement of philosophical position that sounds as though it might be respectable, and then rely upon that as an excuse to shirk enforcement responsibility. If fact, Toiporoff could have just asked the IFA to give him a high sounding reason to do nothing, and they would have come up with something just like that - Hell, that's probably exactly how he came to take that position.--

I don't know the sumbitch, and he's probably some certified honor student type who got good grades on tests and graduated at the top of some class - probably in some eastern school. Those are typically the kind of credentials that result in useless policy. They wouldn't put a real enforcer in any position of authority for that very reason. For all the good the FTC iis accomplishing, it could be populated with people who suffer from Down syndrome. Larry the Cable Guy would be far better than what we have in there now. At least his view is "Git 'er done!"

Richard Solomon, FranchiseRemedies.com,  has 44 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Posted by RichardSolomon on December 10th, 2007

Due Diligence may have saved you guest poster?

I don't know? Did you perform sufficient due diligence or did you buy on hype and your gut feel?

Nevertheless you cannot dispute that franchising is one of the greatest economic models of the 20th and 21st Centuries for both franchisees and franchisors. It just didn't work for you.

The Truth Shall Set You Free!

TIF

Posted by Truth in Franchising on December 10th, 2007

We didn't rush to their bedside!

They sweet talked us lied right in our face. Told us what we wanted to hear. An old trick that men do to seduce a women. Lie after lie after lie. After the act they throw you away and have nothing to do with you. (The act is signing the franchise agreement!) They just wait until they ruin you financially. They better be careful maybe someone will have lots of money they don't know about. And then justice will be prevailed. It just takes the right person with money that will provide zee's the way. We have the will but lack the resourses to go after the crooks. In the mean time we need to warn the public.

on February 28th, 2008

Or people could invest time and money in due diligence...

Government is not your mommy or your daddy. It is up to you to fully investigate your investments before you make them.

Before you spend hundreds of thousands of dollars you might consider spending $5K - $10K for proper due diligence and sufficient time.

The Truth Shall Set You Free!

TIF

Posted by Truth in Franchising on December 10th, 2007

Don Dwyer

I would like to know if you have any information on Don Dwyers past investments? This would be very beneficial to me and others.

Really need to be able to find the cold hard facts.

on February 29th, 2008

Hey Item 20 Ranter!

If you were registered you could have edited your post. HA!

Posted by Truth in Franchising on September 16th, 2007

Tell us what does the UFOC say?

Go ahead Item 20 Ranter!

Posted by Truth in Franchising on September 16th, 2007

FTC says "If possible show your contract and this information"

The FTC knows that the majority of franchise buyers are naive and inexperienced investors ---who are investing primarily for the opportunity to make a living amd to enjoy the American dream.

This is not discretionary money to gamble with or to buy high flying stocks with the view of making great profits; this is the investment of "nest eggs" of honest people who believe in their government and their country. (See Bob Baber QUIZNOS suicide note)

I believe that the FTC notice in the beginning of my UFOC was very carefully designed to obscure the risk of the investment because of the wording used.

The FTC says "if Possible, show your contract and this information to an adivsor, like a lawyer or an accountant." In saying this, the FTC implies that it is not necessary to do so and they reveal that they know that many people will not have the additional funds to hire expensive due diligence.

The FTC also indicates "Buying a franchise is a complicated investment." Their use of the word "complicated" instead of "risky" is highly suspect, expecially in view of the fact that neither the Rule or the FTC requires franchisors to disclose to new prospective franchisess the known risk of the investment in the franchise, as demonstrated by the success or failure of the franchisor's first-generation franchisees,

The FTC has not accomplished the purpose of the FTC Rule that was mandated by the Congress of the United States and instead has cooperated with the franchisors to obscure the true and known risk of success or failure of the franchises being sold to the public.

Who, in our Congress, is responsible for monitoring our Executive Branch? Or, is the FTC accomplishing the will of the Congress?

on September 16th, 2007

Ray Kroc

How about az little more basckground on that 5 million he had to pay the McDonald brothers? I can't find anything on Google.

on March 10th, 2007

Franchising is a Gamble

You are right. You have my sympathy. You were robbed by the system and ineffective regulation made the robbery possible.

on February 12th, 2008

Banks and Due Diligence and ZEES

Did the bank fail in its due diligence obligations to the borrower? Why would Grandma's age have anything to do with it?

Apparently, the bank failed in its "due diligence" by qualifying her for the loan --- or they wouldn't have backed down.

Zees are often ruined because they take the estimates of the frnchisor re start-up costs and capital needed to get to break even. If break-even doesn't occur within the estimate, the Zee has to borrow more and has even more debt to service --or if the ZEE can't borrow more, they have to fail and close their doors or sell their assets for practically nothing to get out from their personal guarantee on the lease.

But, of course the Franchisors always cover their A's in the franchise agreements concerning capital, etc... and there is really no protection for the ZEE. The bank doesn't care, obviously, because they have the the personal guarantee on the house and the savings based on the original borrowing and they aren't going to lose any money.

Is this about age discrimination, Paul, or about the bank's failure to do "due diligence"? What are we talking asbout here?

on March 12th, 2007