Suing your Franchise Banker: Girding one’s Loins

Since I have set this up for a client and defined Predatory franchise lending to the Canadian government, I can tell you.

In 1995, an award-winning Canadian investigative journalist named John Lorinc published his first book, called Opportunity Knocks: The Truth About Canada’s Franchise Industry. An excellent resource; totally blackballed by the industry.

  • Canada is the first stop overseas for U.S. franchisors so our experiences are very relevant anywhere in the world.

Click here for an emphasis-added excerpt from Lorinc’s Chapter 4 called, The 90% Solution: Franchise Economics.

It deals with the a specialized corporate entity: the Franchise Banker. You should find this book and order it online if you are at all serious about learning about modern franchising.

Interesting stuff. The government guaranteed loan program is really just the icing on the cake for these most aggressive of bankers.

If it doesn’t jingle, it doesn’t count.

Rich Mimick, my business school accounting professor

Learn how franchising is financed to know who really is in charge. The brains of this outfit sure ain’t the franchisors, my little overly-trusting friend.

BTW: I should mention I had an eventful 6 week career with a Canadian bank in 2000. The training program was going well [we both thought] until they realized I was that Les Stewart.

  • Big Franchising delivers very sharp disincentives to those that raise uncomfortable questions.

The latest example was last month regarding selling insurance into the Canadian franchise industry. Who wouldn’t want me as their insurance broker, I ask you?

It seems history means nothing to some industries:

It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.

Lyndon B. Johnson, 36th U.S. president

An early (around 1400) drawing of a chastity belt. [above, thanks to Wikipedia]

2 Responses to Suing your Franchise Banker: Girding one’s Loins

  1. Carol Cross says:

    Not being an expert and instead just an old woman with time to research and think, I come to my conclusions and understanding as to the truth of those matters concerning franchising in a different manner than the experts and those within the industries that support franchising.

    Before the shocking and eye-opening experience with The UPS Store Franchise, I never thought about franchising at all, and had no understanding, or interest, whatsoever, in the business relationship involved in a franchise. When I took the kids to McDonald’s or to Dairy Queen or IHOP, etc.. I never thought about these businesses as being INDEPENDENTLY owned, etc.. I was captured by the big Brand and its advertising and comfortable always because I got what I expected to get and what I was promised in the advertisements of the big brand corporations.

    Like the Congress of the United States (as indicated by the IFA) most Americans don’t know the difference between a franchisor and a franchisee. This works to the advantage of the franchisor and the franchisee with the consumer public, but greatly to the advantage of the franchisors and to the disadvantage of franchisees when franchisors and the franchisor bar lobby the Congress and the FTC, etc…for legislation that protects the interests of franchisors.

    I understand now, after research and reading the experts, that franchising produces “product” for the banks/lenders, brokers, advisors, the ABA, the Landlords and for government and that it is public policy to encourage and protect franchisors because franchising does contribute to economic activity in the economy and produces “product” for all of the special interests involved. The parable of the broken window and the tyranny of the majority is all in play in the game of franchising.

    What I have found as most shocking is that over ten years ago in public comments to the FTC, the SBA Advocacy Committee, who is charged by The Congress to represent the interests of small business to the agencies of government, etc., as well as Susan Kezios, the President of the American Franchise Association, and Robert Purvin, author of the book Franchise Fraud, and founding member of the AAFD, indicated clearly in public comments to the FTC that the FTC Rule was flawed because historical performance statistics or earnings were not mandated to be disclosed under the FTC Rule and the state UFOC’s.

    The FTC, after ten years, absolutely ignored these comments and continues to protect the franchisors and the status quo of the law and process that has stacked the deck against franchisees in arbitration and in the courts.

    There is no doubt in my mind that prospective franchisees are a calculated sacrifice under public policy and the FTC Rule to ensure that franchisors always have a full pool of prosepects to whom they can sell their franchises. There is no doubt in my mind that, as Robert Purvin and Susan Kezios have indicated, that the regulation of franchising by the federal government was intended primarily to protect franchisors from charges of common law fraud in the courts from franchisees who would not thrive as promised by the franchisors outside of contract.

    Apparently, the FTC has been captured by the special interests and the status quo of franchising in the USA will not be disturbed because apparently all three branches of government and both political parties support this ugly and immoral public policy that, in practice, is a violation of the free market principles of capitalism.

    Thanks, Les Stewart, for helping me to think and to find my own truth. Is it the Franchise Bar who drives the get-away car, while the franchisor sits in the passenger seat next to the driver, and the lenders and the bankers sit in comfort in the back seat reading The Wall Street Journal?


  2. franchisefool says:


    Yes that is likely the arrangement inside the car but I think circumstances can demand different positions.

    What I know is that when Big Franchising decides there is a threat, they act with great vigour, determination and perseverance.

    They do not forget those that oppose them.

    The extension of that is that they are sealing their own eventual doom. You see, Carol, it’s not just that they break trust with those that believed them, the elite has lost the fundamental capacity to trust anyone (especially themselves).

    What this means is that they will continue to spiral downward with no hope of being saved. They will not be saved because of the unwillingness of their victims to forgive but by their own cynical view of human kind.

    Listen to what C.S. Lewis wrote:

    You see,” said Aslan. “They will not let us help them. They have chosen cunning instead of belief. Their prison is only in their own minds, yet they are in that prison; and so afraid of being taken in that they cannot be taken out. But come, children. I have other work to do.

    so afraid of being taken in they cannot be taken out.

    Ain’t that the irony?


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