What a franchise system does versus what it says

You look and perceive the bricks-and-mortar of a store and conclude what a franchise “system” is and is not.

You search for information and start to look into it. Your heart or fear sometimes takes over.

Humans tend to accept some information and discount other data [confirmation bias] based on non-rational notions. The problem is we won’t know until it’s too late; after we’ve signed [hindsight bias]. Some deals are written in blood.

By looking you see what you wish to see, we deceive ourselves [wishful thinking bias]. We are sometimes aided by advertising we didn’t identify as propaganda.

The system is the means of mining value from the franchisor’s customers [franchisees]: Max. cash per unit of time. The pre-sale means are best accomplished by deceiving and encouraging self-deception.

  1. Modern franchisors are in the life savings appropriation business. They use the mask of an operating business to confuse.
  2. Franchising is marketed to those individuals who have sufficient (1) ignorance and (2) capital to make the effort worthwhile.
  3. Qualified investors sign franchise agreements that re-defines (degrades?) themselves as near-slaves in the hope of return [Faust or Deal with the Devil].
  4. When you become aware, you are unable to defend yourself [$, emotion, trust].
  5. Franchise bar members are paid handsomely to maintain the machine and clean up the mess.

Lately, people seem to believe that betrayal is without personal consequences.

One Response to What a franchise system does versus what it says

  1. Carol Cross says:

    I believe that when a contract is accompanied by a so-called disclosure document required by the federal and state government (as is true in the US) tends to lull prospective buyers who are looking for solutions to income into a false sense of security. This is why franchising grows in periods of recessions and why governments don’t want to constrain predatory instincts of franchisors who need to use franchisees as resources to grow profits for the special interests and to provide jobs and taxes to government,

    Franchisee prospects are really deceived by appearances that feed their confirmation bias. The visibility of the “bricks and the mortar” is the “proof of the pudding” to the prospective buyer of franchises. They have NO idea of the brutal realities that stand behind the appearance of success and the studied but false appearance of good faith the franchisor presents. They think they are “partnering” in good faith to earn profits for their franchisor and themselves. and that, of course, the franchisor wouldn’t invite you to invest hundreds of thousands of dollars in a franchise and longterm lease unless there will be profits. Franchisees would, of course, not be willing to personally guarantee the franchise and the lease if they really understood the risk that is involved.

    The Franchise Bar is part of the machine, no doubt, and law, process and procedure, keeps the machine oiled and running smoothly.

    At least the Minister of Industry of the United Kingdom has insight and is not going to encourage any special regulation of franchising that might lull the naive and inexperienced into as false sense of security. In the hearings in 2007, she indicated that the banks, perhaps, would or should not loan money to prospective franchisees if the failure rate of first-generation franchisees was high. Maybe banks and lenders will have their own data bases that will pick up on the failure rate of first-generation franchisees but how will they pick up on those failures that don’t appear on public records? That is, what about those failed franchisees who give away their businesses in fire sales to get out from under the debt of the long-term lease and who continue to pay on their debt to avoid personal bankruptcy?

    The banks and lenders, of course, have always given the franchisors special treatement because of the guaranteed loans and because home equity loans were such a sure thing for banks in bull market in housing.

    Like

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