What is the Science of arresting intelligence long enough to get money from it?

August 19, 2009

SexyCopAdvertising.

Professor Leacock‘s full quote:

Advertising can best be described as the science of arresting the human intelligence long enough to get money from it.

Franchising is just like that.

The primary stage of arrested intelligence (entrepreneurial wishful thinking) is call pre-sale due diligence.

Due diligence, DD was created as a concept to serve the sellers, NOT the buyers of franchisors.  Perfect, “110%” awesome research can NOT provide reasonable protection against post-sale franchisor opportunism.

DD cannot stop a totally sweetheart franchisor from turning into the worst predator, unilaterally and selectively after the contract is signed.

DD never could and it never will.

DD was created to give a plausible excuse why 1,000s of hard-working, honest investors have lost their life savings. It is maintains the ” confidence” in the game, cools out the mark and confuses and distracts people. When the siht hits the fan…the victim is blamed and most importantly, their shame (stigma, spoiled identity, self-loathing) silences their potential dissent.

Dr. Donald L. Nathanson (The Name of the Game is Shame) provides a nice treatment of a very powerful affect: shame. His Compass of Shame, I find very interesting. He defines 4 patterns of reaction:

  1. withdrawal,
  2. avoidance,
  3. attack others or
  4. attack self.

Note how certain ones of these strategies are encouraged to be used over at Blue MauMau and Franchise-Chat.com. People are ridiculed our shouted-down, banned, shouted, censored or made to be felt stupid. Even to the point of lecturing rape victim advocacy groups on their ignorance of asinine legal processes.

Just like they know the distracting qualities of such a lovely image, above.

Confusion, distraction, sleight of hand…not very difficult to disable critical thinking, is it?


On Shame and Guilt

September 16, 2008

In Margaret Visser‘s terrific little book called Beyond Fate, she presents many good ideas.

One of the central ones is that we are falling backwards into the Greek concept that Christianity had freed us from. As this 2002 CBC Massey Series Lecture presents:

People today are often afflicted with a sense that they cannot change things for the better. They feel helpless, constrained, caught — in a word, fatalistic.

Feeling your life was pre-ordained or that you have lost control, lives very little room for free will and forgiveness. While living in Barcelona, Spain Visser came to understand debt collection.

Honour and shame are always waiting in the wings; they can erupt anywhere, at any time. There need not be anything obviously reprehensible about such an eruption; it might even seem vivid and amusing – although not to the person reduced or shamed.

So maybe there is justified or positive shame and unjustified, unhealthy shaming?

For example, in Barcelona today a creditor can engage a collection agency [see Think a Franchisor took your money improperly? posting] that specializes in the haunting, in public, of a debtor: the one owing money is followed about everywhere he goes by a man in a top hat and tails. The tall, powerful stranger (he has to be prepared to defend himself if his quarry loses his temper) never needs to say a word. This picturesque ploy depends entirely on shame, on the fact that every Barcelonan looking on understands that the man in the frock coat is a walking embodiment of a sum of money owed and the fury of the person waiting to be paid.

Let’s repeat that: understand that the man represents a debt and anger at being denied its payment. Lots of that around in franchising these days.

Guilt v. Shame

Visser defines guilt as attaching to an action and can be forgiven or confessed. This is the unique technology that Christianity brought to western civilization. God alone provides absolution.

Shame on the other hand, is a much more ancient idea: It’s about losing face, losing social standing, losing identity, losing honour. No one can absolve you of a shame: you have to revenge to get your face back. Honour is given by others as much as shame requires the other (an audience). The Mafia is a shame-based system.

  • I believe it is a legitimate advocacy means to communicate to the franchise elite in a language that they project outward: In short, it is justified to ridicule, embarrass, shame and dishonour Big Franchising.

In this way, their cowardice and weakness is demonstrated.

PS: Margaret has a new book called The Gift of Thanks that I am looking forward to reading very much.


Think a Franchisor took your money improperly?

August 22, 2008

Juan Medina/REUTERS

Why not contract with someone to shame them into giving your money back?

The Globe and Mail has as an interesting article called Dressed to embarass: Spanish collection agency sends out men in top hats and tails to humilate debtors into paying up.

It seems a collection agency with over 600 employees in Spain and Portugal called El Cobrador del Frac (English: The Debt Collector in Top Hat and Tails) collects about 70 per cent of the debts they buy at a discount from individuals and businesses

“We send collectors in uniform and collectors without uniform. It depends on how the debtor reacts. If we need to do it to collect a debt, we send a collector wearing top hat and tails, so his debt attracts more attention,” he said.

They first start with a telephone call, a facsimile and only resort to sending someone out when there is a refusal to settle.

The agency swears that they always stay within the limits of the law but that does not stop them from being very creative.

For example:

…seeking to reclaim a large debt for an unpaid wedding banquet, the company even resorted to phoning guests who had attended to demand they pay their share of the bill. The red-faced bride and groom soon coughed up…

My oh My…isn’t his a clever idea for a way to raise funds for a national franchisee association? Or the next big thing as a franchise concept?

  • “Buy” franchisee debt and collect from their franchisors.

Lots of possibilities here, folks:

Q: “Why does that man in the funny hat keep following us?”

A: “Don’t worry, son. He’s just been sent from a loser, m—–f—-r franchisee.”

Q: “Daddy, what’s a m—–f—-r?”

A: …

It seems using shame is a very old Spanish tradition in debt collection. They will simply follow around the president of the company for as long as it takes: as he lines up to catch a coffee at Starbucks, sits next down to him at the cafeteria, at home on the weekend, public events with the family, etc.

Now let’s be fair: Don’t forget to anyone that profits from the status quo in Big Franchising. We don’t want to limit our unfettered capitalism to just these examples:

  • franchise bankers [and their exec VPs] at their Christmas party,
  • alpha male lawyers [and their senior partners] when they show up to Court or sales appointments,
  • media outlets who sponsor franchisors’ trade shows [tip off their competitors, first, maybe?],
  • franchise associations at their golf tournaments/trade shows/annual meetings,
  • picket every Monday a.m. to key politicians at their offices [constituency and other],
  • saying hello to the lapdog regulators on behalf of franchisees who were denied investigations into their complaints,
  • sales consultants when they exhibit at vertical industry trade shows,
  • the list goes on and on.

Of course, everything would be recorded on a digital camera, live streamed and archived on a YouTube channel. To protect the innocent and the initially recalcitrant.

Perfectly legal, Highly effective :: Doable Tomorrow.

Maybe it’d at least slow down crap AU lawsuits heaped on franchisee advocates which are designed drive them into bankruptcy and silence.


In Praise of Bankruptcy protection

June 29, 2008

My 2001 personal and corporate bankruptcy was substantially pre-ordained the moment I signed the franchise agreement in 1998.

It was wishful thinking that I could be profitable as a Mom-and-Pop operator when I got hooked up with, what turned out to be (see hindsight bias) a system that didn’t have a proven business model. I kept putting more and more time and money in (sunk costs) believing I could turn the corner.

Michael Kernaghan of the Weed Man was right: I didn’t have enough money to grow the business quickly enough to be sustainable.

Once in the soup, I created an internal fallacy or illusion. It was fueled in part with my increasing attachment to the money I had lost (loss aversion) which is usually 2 times as powerful as the desire for a comparable economic gain (prospect theory).

It was very difficult to square this failure with the frequent successes I had had in my life up to the at time (cognitive dissonance). And the franchisor could always be counted on to counsel perseverance and asking relatives for more money.

  • Very Large Note: I had no flipping clue (at the time) that I was in a very real way acting in a delusional way. I thought I was being perfectly rational. I had did not know I had Drunk the Kool-Aid so badly. (Most other cult members don’t think so, either.

Whether a system is predatory or incompetent, it does not matter: The investor will lose it all, in all likelihood. The only difference will be the style you exit with.

Bankruptcy

Of the tens of thousands of dollars I have spent on professional advice, the most useful franchise expenditure was with my Bankruptcy Trustee.

He once mentioned that the average indebtedness of a client was $25,000.

My former franchisor realized less than seven per cent (7%) of their claim on my business’s disposal. That was no surprise to a 1,800 franchisee multi-brand international corporations.

Observations

  1. I believed I could turn early losses around by working harder and investing more. I was wrong (see pride). Perversely enough, the harder you work, the more you become attached to being a franchisee. It works like a Boy Scout knot that tightens as you struggle with it.
  2. I went 3 to 4 years too long. They call it “protection” under federal law for a very good reason. I was over-optimistic.
  3. Bankruptcy was the best business decision possible.
  4. The manner in which I bailed was important to me (no credit card debt, only the likely suspects got burned).
  5. My spouse never signed anythingever. (Everyone notice this?)
  6. My retirement savings were with a life insurance company which, for me, proved to be beyond the reach of bankruptcy law. (Talk to your financial advisor about protecting yourself before investigating anything.)
  7. Going independent delayed the inevitable and it allowed me to acquire the start of my franchising education.
  8. Financial counselling before I actually declared bankruptcy (ie advice in helping to decide) from a Trustee in Bankruptcy was the 2nd best money I ever spent.
  9. Bankruptcy’s stigma (acting through the human emotion of shame) kept me going. I thought that if I was going down, I may as well learn as much as I could about franchising as I went.
  10. Industry insiders told me stuff that they never imagined I would using in 10 years. Everyone cuts a deal, signs a gag order and exits feeling it was mostly their fault.
  11. I got hooked on learning how this trap is laid, especially the psychology that makes a franchisee seem to so comprehensively collaborate in their own imprisonment (thought reform).

Credit counselling is a part of the process of being a first-time bankrupt. It went pretty smoothly for me.

When my counsellor said, “What lessons have you learned, Les?” and I replied: “Don’t buy another franchise?“, the questions stopped.


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