Franchising’s collapse: Tragedy of the Commons

The Tragedy of the Commons is an important concept that has very serious implications if you are thinking of buying or continuing to invest in a single-unit (Mom-and-Pop, $ as a high % of total personal net worth) business format franchise.

  • Investing [now] in any franchise is like feeding a corpse.

Why that is so is a complex question but one that should be asked. Briefly the Tragedy of the Commons is:

a type of social trap, often economic, that involves a conflict over finite resources between individual interests and the common good. It states that free access and unrestricted demand for a finite resource ultimately structurally dooms the resource through over-exploitation.

The fastest example would be air pollution. If you think this is just egg-head stuff you run the real risk of being wilfully ignorant with your life savings.

Such a notion is not merely an abstraction, but its consequences have manifested literally, in such common grounds as Boston Common, where overgrazing required the Common no longer be used as public grazing ground.

My position is:

  1. the lawyers have been, over time, so good at closing the loopholes that any hope for even legitimate remedy is practically impossible,
  2. the smart money has concluded some time ago that any franchise is too risky (too many types of fatal business risks v. independent businesses), and
  3. the industry becomes increasingly desperate for new sales.

As more and more people talk openly about their negative franchise experiences, the salesman can only increasingly prey on segments of our society that have not been fraud-proofed. There are no new pastures: they are all Wastelands.

The industry has, in my opinion, permanently and irrevocably destroyed their own means of survival. Every ecology has its limits.

  • Psychological denial is a cluster of behaviors and emotions that protects people from pain. It is most evident in the irrational outbursts (see shunning of Blue MauMau contributors) of experts with a career tied to the industry. Note: this emotion affects both “good” and “bad” actors [ie. the illusion of legal remedy enables delay of the inevitable burial].

It is a shame that the franchise bar, franchisors, salespeople, bankers, etc. have invested so heavily personally [education, reputation, status, income, identity] in a dead industry. But it ain’t no Greek tragedy, either as I know the quality of most of these men.

And it sure as hell needn’t cause you to join in their delusional thinking or fate.

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