If you lost your money, Call your franchise banker.

October 27, 2010

Get smart.

Who do you think teaches new franchisors or amateurs like David Scenna (Hookers and Booze: Your tax dollars at work) franchise money management?

D’oh.

Your franchisor is nothing much more than a rodeo clown.

  • The brains behind the outfit are the franchise bankers. Only a fraction of the government loan losses are claimed because accurate reporting would queer the deal. They self-finance the used franchises via compliant equipment appraisers on the front end and their captured bank receivers on the other (exit franchisee into bankruptcy.
  • See 2005 details.
  • Crapola franchises.

Last time I checked, +80% of Canada Small Business Financing program loans were done via these people below. Why not give them a call and ask them for a 10 minute interview?

Bank of Nova Scotia
Mr. John Dykeman
Ms. Irene Thomson
National Franchise Programs
Phone: (877) 252-6088 Toll Free
http://www.scotiabank.com/franchising
franchising@scotiabank.com

BMO Bank of Montreal
Mr. Steve Iskierski
Senior Manager, National Franchising Services
Phone: (416)927-6026 / (877)629-6262
Web: http://www.bmo.com/franchise
steve.iskierski@bmo.com

Canadian Imperial Bank of Commerce, CIBC
Mr. Charles Scrivener
Director & Head, CIBC Packaged Loans Group
Phone: (416) 980-3225
http://www.cibc.com
charles.scrivener@cibc.com

Royal Bank of Canada
Mr. Paul DaSilva
National Franchise Market
Phone: (416) 974-8299
http://www.rbcroyalbank.com/franchise
paul.dasilva@rbc.com

TD Canada Trust
Ms. Irene Law
National Manager, Franchise Banking
Phone: (866) 871-2178 / (416) 307-9270
http://www.tdcanadatrust.com/franchise
irene.law@td.com

Source of contact information


Risks change: Pre-sale due diligence does not

October 24, 2010

Just like entropy (going from order to disorder), things in business normally turn to shit.

Business risks increase (19 out of 20 times…) as the franchise agreement runs but your sunk costs keep you hooked up to a babe that’s turned into a wolf. Every half-baked new cash-grab scheme, you’re “All-in”.

But that does not stop the thought machine, sometimes run by “world class” CDN franchise bankers.

– Thanks: Wolves of Wednesday on ThisIsntHappinesss.com


CFA says Bank says Franchises 4 times more successful?

December 1, 2008

waynestateuusdeptcommerce1In a Blue MauMau post called Canada’s Misleading Franchise Success Rate Claims, Lionel Hutz PA quotes Ms. Lorraine McLachlan, president and CEO of the Canadian Franchise Association, as claiming:

McLachlan said that a recent study released by BMO [Bank of Montreal] indicated that nearly four times as many franchises succeed compared to independent small business.

“When you go into an established system, which is the hallmark of a franchise, the probability of success is obviously incrementally increased,” McLachlan said. “The fact that there are more than a couple of locations currently operating using that brand, using that system, suggests that it’s not a flash in the pan and that there is some history that it will succeed.”

… “in economic times such as these, the fact that you are dealing with an established system that has predictable success means that the bank in all likelihood is going to look somewhat more favourably on your application,” McLachlan said. “In many cases, the franchisor will help you work with the bank.”

The full article can be found at The Sudbury Star.

This is problematic because the franchise industry historically has been very loose with their success/failure statistics. Indeed this is what Dr. Timothy Bates of Wayne State University had to say:

Knowledgeable scholars who study franchising issues routinely express contempt for the failure rate statistics publicized by franchisors.

Francine Lafontaine, for example, states ‘one of the major selling points of franchising to franchisees over the years has been the statistics vehiculated by the trade press on the very low failure rates of franchised businesses compared to independent operations. These statistics never had real scientific basis’ (p. 14, 1994).

Such criticism does not deter the industry.
– Survival Patterns among Franchisee and Nonfranchised firms started in 1986 and 1987, U.S. Department of Commerce, p. 6.

I am unaware of any study since that time that would contradict this.

UPDATE

BMO Bank of Montreal: I had telephone conversation with Steve Iskierski, Senior Manager, National Franchising Services for BMO Bank of Montreal. Iskierski was unaware of the basis for this 4 times notion and their is certainly no study that he is aware that BMO has. He was unclear as to why Ms. McLachlan of the CFA would quote that figure and ascribed it to reporter misquotation.

Canadian Franchise Association: Emailed for copy of report. No response.

The Sudbury Star: Left a message for Janice Leuschen. No response.


Follow

Get every new post delivered to your Inbox.

%d bloggers like this: