Isn’t a resident 2nd opinion a waste of $ once you lawyer-up?

December 7, 2010

No: actually an independent business consultant is needed during legal action.

It is wise to avoid a franchise lawyer for at least a year (commercial, slander, etc. are fine). Lots of reasons but mostly groups need to mature and build trust before any professional can really help them. Leaders especially need a type of de-programming.

Franchisors understand one thing: power. In 2010, predators understand only actionable legal threats. There are therefore 2 stages: pre-first legal claim and post-first claim.

Pre-first Legal Claim: It takes 1 to 2 years and a one-time investment of $500,000 for a franchisee group to develop a susttainable independent franchisee association.

Only after that investment can you decide whether to sue your franchisor or not. No shortcuts: it takes time, experience and money. Most franchisees have never been in a group before and many choose to free ride on the dues paid by others. Frequently, only 10 to 15% of franchisees pay, while all of the benefits are distributed to 100% of the franchisees.

What happens most times is that the early professionals end up subsidizing the creation and early survival of the group. These are obligations or accounts receivable that consultants like me have accumulated over the years.

First Legal Claim: Once the legal card is played, the dynamics change. It has little to do with the honesty of the attorney: it’s just the way it is when their is such an imbalance of information between client and professional.

Every attorney is a credence good provider: their services are difficult to determine as far as quality and quantity are concerned.

Problem: The risk of low quality or excessive quantity of services is very real. Groups of franchisees are at the mercy of monop0ly legal service providers once the papers are filed (see The Price of Law: How the Market for Lawyers Distorts the Justice System).

The best solution is for the consultant to remain as a resident 2nd opinion during the life of the lawsuit.

What is fair compensation (accumulated A/R and ongoing services, who does what) should be determined in a transparent way before the writ flies. Not only is it fair to pay your obligations, it’ s being a long-term, shrewd businessperson.

Lawsuits should not be about franchisors paying out cents (now) and then clawing back $ (later).

The destruction of the independent franchisee association should not be an option on the table as settlement time happens. Its survival should not be acceptable under any terms.


Career advice from Ray & Carol

October 30, 2010

Dear Carol and Ray,

People are spreading rumours that I am an untrustworthy, obsessed and unbalanced person.

Should I write a book or continue to be black-balled?

Signed,

Les


Want to Sue? Get an independent 2nd opinion

October 30, 2010

Wise in medicine. Critical in franchise law.

Independent consultants ensure their honesty from pre-trial evaluation (before 1st interview) to settlement.

Any CDN lawyer who can’t work with me is saying a lot about themselves.

Don’t trust in non-verifiable monopoly services.

TEST: How’s your one franchisor: one franchisee relationship working for you?


Nobody gets paid when the investment answer is “no” or “not yet”

October 25, 2010

Until quality matters, honesty does not pay in franchising.

Creating a demand for investor discernment is what regulation does and the only valid reason to have a civil service.

Publicly mandated membership :: privately-run revenue streams.

Make franchising a license-able activity, please.

ThisIsntHappiness.com


WikidFranchise helps experts classify franchise systems

September 21, 2010

On a Scale of 1 to 7, How predatory is this system? Or that one?

Due diligence (mandatory, from a certified service provider) is necessary if you are entering a franchise agreement because of the many hidden business risks.

Source: Wikipedia


Les Stewart Consulting: franchisee leadership development

September 11, 2010

While my work has, up to now, been for free on the internet (here and at WikidFranchise), I too need to charge for my services. I have invested in a technology that franchisees can access to improve their situation.

One thing I have learned about franchisee/franchisor relationships is this:

Power never takes a back step — only in the face of more power.

Franchisees are not powerless. It is a lie that franchisees cannot improve their situation, although an unthinking, passive legal-only strategy will almost always fail.

Franchisee champions that call me require a willingness to learn: to accept an education, advice, training, leadership development and coaching that quite frequently moves them outside of their “comfort zone”. After an initial interview, we customize a plan to protect the leaders and start re mediating the damaged/broken franchsie relationships.

I teach a PhD course in franchisee empowerment.

I choose my clients carefully because these are long-term, highly confidential trusting relationships. I am available 24/7 and have many resources to draw upon (see LinkedIn). Franchisor over-reaching (opportunism: self-interest with deceit) is a chronic condition that goes for as long as anyone is a franchisee. There are very few short-cuts or quick fixes.

Call or LinkUp if you like.

  • 705-737-4635 Tel

Coffee Culture: likely legit or a FranWhack?

April 29, 2010

Nothing is certain in life and that goes for franchising, too.

Coffee Culture Café & Eatery sure looks like a winner. Very rich-looking, solid, many happy-smiling faces.

It is important to look past the flash, however. In the growth phase, who sells the offering says a lot about the credibility of the offering.

CJ Woodburn and Associates appears to be the 3rd party sales agent and lists the investment qualifications as:

“- Store hard costs start from $175,000 (this varies depending on size, conditions, landlord and location).
– Franchise Fee (10 years) $20,000.
– Royalty (weekly) 7%.
– Ad Fund (weekly) 2%.”

Weekly (not monthly) payments and no mention of head lease, equipment or product maximum margins.

When I asked a few central Ontario current, multi-year, coffee franchisees about the offering: Does it…

  1. look like a good deal  or
  2. is it what Richard Solomon defines as a FranWhack?

They were unanimous in their opinion.

Solomon’s The New Franchisor Scampaper in his Franchise Fraud series is good investment reading. The old bastard sums up:

If you think you can outsmart professional swindlers all by yourself, you really are not smarter than a fifth grader.

Don’t get me started who’s papering this… (ie. “special relationship” CSBFA-based franchise lender)


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