The Franchise Fraud by Robert Purvin

Bob Purvin’s book is a must read.

Don’t listen to Richard Solomon’s rants against Purvin and the American Association of Franchisees and Dealers. Richard needs a distemper shot.

In a Blue MauMau posting, Bob tries to explain what he meant by fraud:

Purvin explained it was a much bigger problem which he addressed in a book he wrote, The Franchise Fraud, which was republished recently. He told them that it wasn’t so much about the people that were out selling fraudulent deals, but that the franchising industry had painted a rosy picture about franchising. He said they tell you that when you buy a franchise you are reducing your odds for failure and dramatically increasing your odds of success, because everybody knows when you buy a franchise you buy a proven commodity. He said, “That’s false. Most franchises are much weaker than they appear to be. The blue chip list of franchise opportunities is a very short list.

He goes on to state that any legal protection is an illusion:

He also said that people believe that they are protected by a fabric of laws that would prevent them from being defrauded. “That also is false.” The point of his book was to wake up the buying masses that when they buy a franchise they have to be very careful and treat that purchase every bit as cautiously as the guy in the corner who says, do you want to buy my Rolex watch. Unfortunately, hundreds of thousands have been bitten by the franchise bug and can’t believe that they weren’t buying into a sure thing, Purvin said.

Sound advice from a real pro.

  1. Most franchise systems are unproven.
  2. The blue chip franchises are very few.
  3. There is no legal protection.
  4. Treat buying a franchise like you would buying a “genuine” Rolex on the street.
  5. Hundreds of thousands have been burned.

Read the book.

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28 Responses to The Franchise Fraud by Robert Purvin

  1. Scott Layer says:

    This is right on. There are many examples of the type of “fraud” discussed in this book. Re-franchising is an example of how the franchisor and the franchising industry at large ends up manipulating the data such that a business failure ends up looking like nothing happened. When you buy a franchise make sure you have the complete chain of ownership. Read this book and stay away from any franchise that has frequent terminations, frequent litigation, management that only sells franchises, short training durations, costly territories that are very small and can’t support the business. Also, follow the numbers, if its growth is small, if very few franchisees have multiple units and most own single units, you can bet its not a blue chip format or a blue chip franchise. Look at the Franchise 500 list, if its very near the bottom there is a reason, make sure you check out any franchise fully. An example of a very poor franchise for the reasons listed above is Pirtek. Be very skepticle, and do your research. If you have any questions regarding Pirtek e-mail me Fixxme@aol.com

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  2. Carol Cross says:

    If you will Google up Nolo’s TEN GOOD REASONS NOT TO BUY A FRANCHISE, you will see that the first good reason concerns the prospective buyer’s inability to determine the risks and the rewards of the investment.

    After thirty years of franchise regulation, The FTC Rule, the majority of franchisors still make NO EARNINGS CLAIMS in the disclosure process because Item 19, Earnings, is optional for the franchisors. After ten years of thinking about it, the FTC still failed to mandate that earnings claims or any financial performance statistics on a UNIT basis be disclosed by the franchisor to the new buyer.

    Those who speculate about why franchisors don’t disclose earnings claims explain:

    If a franchisor makes NO earnings claims in the franchise agreement or in State FDD (formerly UFOC) the franchisor retains his “safe harbor” provided by the FDD and the Franchise Agreeement that protects the franchisor from franchisees’ claims that they have been fraudulently induced to contract in arbitration and the courts.

    If a franchisor’s system produces low profits or no profits for unit franchisee owners, why would the franchisor want to disclose this fact to new buyers who are building new physical units upon which to hang the brand name?

    Since the majority of franchisors do not make earnings claims, it is possible to stay with the majority and suggest other reasons for not disclosing earnings, as indicated recently in the Franchise Times.

    LET THE BUYER BEWARE!

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  3. David Johnson says:

    I am very happy to be a Pirtek Franchise owner in Plano, TX for the last 3 years. I have struggled a little bit in this economy, like everyone else, but I am proud to report that my business has increased significantly over the last 12 months while I have watched several businesses close. Pirtek has over 300 Centers in operation around the world and is number 1 in the world and number 1 in the U.S. in mobile hose replacement.

    The bottom line is that Scott failed and I believe he wants everyone else to fail just like he did.

    The Pirtek System is not for everyone. It requires hard work and diligence, just like any business. However, if you follow the Pirtek System and grow your business like 300 other franchisees around the world have, the rewards can be very big! That’s why 6 of the Pirtek owners in the United States own more than 1 Center and some have signed on for a third Center. I am glad to be a Pirtek Center owner and have already signed on for another one too! -David Johnson, Owner Pirtek Plano

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  4. Sheila Wysocki says:

    I believe the comment caught me more than the book. I would think that every business person would look at all sides of the issue and make their own decision. Having different points of view will have prospective franchisees ask questions. I hope Mr. Johnson has continued success with Pirteck, it sounds like a good match. I hope that Mr. Johnson doesn’t need to review or refer to the Franchise fraud. Luckily, the book exsists for others to know that they are not alone. I believe this is an important read for anyone getting into a franchise. I don’t understand why someone would not want a prospect to be informed, isn’t it their right to have the knowledge? Kudos to the author for informing the public.

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  5. Scott Layer says:

    Obviously Mr. Johnson is defensive about a topic involving franchise fraud. I have met this man via telephone, he threatened litigation against Pirtek and settled for a modified second territory concession.

    Mean while, a Pirtek location located next to Mr. Johnsons’ Plano location, won a very important legal victory. (Jantt corp. Vs Pirtek)
    Mr. Johnson was given Pirtek supported confidential customer lists and encroached on a fellow franchisee. In the end Mr. Johnson threatened to sue PirtekUSA, and was given exclusive rights to a second territory for a deal. The other franchisee in Dallas was released from his onerous contract and free to conduct business.
    Mr. Johnson should be happy with his franchise ownership, he created a much more experienced competitor in his own back yard and is forced to buy only Pirtek product, while his now, new, competition buys an equal product at about half the price. What Mr. Johnson fails to tell you is his profits, or his gross sales, or any important business data.
    What are his income taxes? How much capital has he put at risk?, how much time and effort has he put forth on his business? What is his return on investment? How good is his business? If you knew the truth would you buy a Pirtek? or would you run for the hills?
    Robert Purvin explains the indentured servant franchisee/franchisor relationship well. Mr. Johnson bought into this concept by going full bore into a Pirtek.
    Owning any business should be about profit and ROI, just owning a franchise, especially a Pirtek, means nothing if the franchisee ends up buying himself a job, making a low income and buying himself a low paying high risk job!
    There are only 38 Pirtek locations in the U.S. after 12 years plus of advertising and trying to grow the brand. Why so few?
    Why so many bankruptcies? Why so many closed down locations like Tucson, Portland, Miami, Dallas, Houston, two locations in Connecticut, Mobile, New Orleans, Boston, Ontario, Anaheim, Allentown, Carolinas, Pittsburgh, refranchised locations in Tampa and Clearwater, and many others?
    Mr. Johnson does not tell you that more Pirtek locations have been closed, been terminated, re-franchised or gone bankrupt than have been successful. The truth has never got in Pirteks’ way.
    I agree it should be a franchisees right to be informed, but franchisors in general and Pirtek specifically, have no legal responsibility to reveal certain details. This is the essence of the fraud, and when combined with an onerous contract, low success rate, legally deleted data and a good bit of Discovery Days the franchise fraud perpetuates itself. Mr. johnson and many others have been duped, some know it, some will find out, and some will never admit it. In this case it is just a matter of time before people like me and companies like BMI, or Enzed, or RYCO kick ass and put Pirtek and its franchisees in the poor house. If you have questions or comments please contact me at 813-318-1258, or fixxme@aol.com.

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  6. Carol Cross says:

    Yes! Unfortunately, the FTC Rule does not MANDATE that ANY unit performance statistics be disclosed by franchisors to new buyers of the franchise. This is the fatal flaw of franchise regulation as indicated by Robert Purvin of the AAFD and Susan Kezios of the American Franchisee Association.

    Under Securities Law, this information would be MATERIAL because if prospective franchisees understood the failure rate of first buyers of franchises and the low or no profitability rate of units in the franchisor’s system, they wouldn’t invest if the failure rate was high and the chance of operating a profitable franchise was low.

    It is one thing for these franchisors to trick you into signing a boilerplate contract wrapped in disclosure law in which you acknowledge that the franchisor hasn’t guaranteed you profits or success and quite another thing (fraud, in my view) for the franchisor to fail to disclose the failure rate and unprofitability of the units within the system during the sales process.

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  7. Scott Layer says:

    I could not agree more. You have said it best. Thank you very much Carol.

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  8. Carol Cross says:

    Thanks Scott Layer! We have to know that the scenario of the FTC Rule and the FDD’s does protect franchisors from charges of fraudulent inducement/fraudulent inducement in the courts. This, of course, as Robert Purvin indicates, was the purpose of federal regulation of franchising. (See his Comment #79 to the FTC in 1997 in a Google Search)

    Apparently, the “powers that be” decided that true disclosure of the risks by the seller of the franchise, the franchisor, would inhibit franchising. And, on the other hand, if the risk, as known to the franchisor, wasn’t disclosed to the new buyer of the franchise, there would be unhappy franchisees who would try to approach the Courts because they would feel that they had been defrauded because of misrepresentations made in the pre-sale process.

    If these unhappy franchisees could win in arbitrations and in the courts, this would endanger franchise systems because under contract law, a true rescission would mean that the failed franchisee who could prove fraudulent inducement would have to be made “whole.”

    The rationale is that the franchisor and those franchisees who thrive must be protected from those franchisees who fail and that this is for the “greater good” of lively commerce.

    Rescissions in franchise contracts are treated differently because of the FTC Rule and the State FDD’s that presume there is no fraudulent inducement/concealment if the franchisor has complied with the Disclosure Rule. And, under the FTC Rule, there is NO private right of action even if there has been a violation of the FTC Rule. The State little FTC statutes are sometimes in conflict with federal regulatory policy that appears to trump the State statutes. (Read the Coffee Beanery Case on Blue Mau Mau)

    Because franchise contracts become collateral for the franchisors to use in IPO’s and securitizations, etc…the “signed” contracts must be honored by the Courts. The deck is stacked once the franchisee signs a franchise agreement that is wrapped in a government disclosure document.

    Franchisors are then free to commit fraud under cover of government regulation! That is, if fraud can be defined as the act of franchisor selling a high risk and generally unviable franchise opportunity to the public without disclosing the true risk factors, as represented by the unit performance statistics in the franchisor’s possession.

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  9. Carol Cross says:

    Interesting turn of events in the Peaberry Coffee Case! Apparently, the franchisor has won in summary judgement but Janet Sparks, on Blue Mau Mau, has written about this case and posts the legal papers as well on the Blue Mau Mau
    Site.

    Janet Sparks indicates that while the Judge did give the franchisor the victory in the summary judgment, he did make findings that the franchisor did omit to disclose “Material” information that would have prevented the franchisees from buying the franchise. Also, the judge appeared to indicate that the UFOC did not protect the franchisor from fraud?

    God and the Courts work in mysterious ways! The summary judgment will, of course, be appealed to the higher federal court. Anyone interested in this subject matter should read Janet Sparks article on the Blue Mau Mau Franchise site.

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  10. Michael says:

    I signed a franchise agreement and compliance certification. Do you know any court case that the compliance certificate was voided?

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  11. Les Stewart says:

    Michael,

    I do not has that information. I’d recommend checking it out with a qualified franchise lawyer. Sorry. Les

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  12. Scott Layer says:

    Summer 2009. As you know from reading my blogs I am not a fan of Pirtek. I have tried to warn prospective business owners of the risks associated with buying a Pirtek Franchise. You may recall that just four months ago Mr. Johnson, owner of Pirtek Plano (Dallas, TX), was very complimentary of his Pirtek Franchise. Mr. Johnson contradicted my statements regarding the value of Pirtek. David Johnson further stated that business was so good that he had signed up for his second Pirtek Location.
    You will be interested to know that based on numerous calls to Pirtek Plano, 972-423-1111, and e-mails directed to me, that Mr. Johnson has closed the Pirtek Plano location. It looks like the mustard is coming off the Hot Dog.
    If you have any questions regarding Pirtek or the many closures and Bankruptcies please call me, 813-318-1258, or e-mail me fixxme@aol.com Thanks to Ron and the many others that have contacted me. Kiwi, are we still having fun?

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  13. Carol Cross says:

    Those readers interested in Franchising fraud should really read an article that asppeared in the American Business Law Journal (01 Jan 03) entitled “Franchising fraud: the continuing need for reform” and that was published on the Internet in June of 2008.

    This is an excellent review of INDUCEMENT CONCERNS written by attorneys who recognize the flaw in the FTC Franchise Rule as well as an overview of Federal and State Regulation of franchising.

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  14. Carol Cross says:

    In Franchising, THE ELEPHANT IN THE ROOM is the ineffective regulation of franchising that has resulted in the FLAW in disclosure that permits franchisors to sell their franchises without disclosing proprietarial UNIT performance statistics in their possession to new buyers of the frasnchise.

    New buyers are duped into believing that there will be a job and profits asnd that there is small risk involved, and are shocked when their franchised business fails to thrive. The franchisor is NOT surprised and has premeditated acquiring the assets of the failed franchisee, if he wants them, in the long-term binding contract.

    Obviously, CHURNING and ENCROACHMENT are premeditated and franchisees are, under the law, merely expendable resources for franchisors.

    LET THE BUYER BEWARE

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  15. Carol Cross says:

    The following quote taken from Case No. 95-3903 Jerry Morrison and Helen Morrison, Appellants v. Back Yard Burgers, Inc., Appellee, an Appeal from the United States District Court for the Eastern District of Arkansas, submitted:April 12, 1996 and filed: August 8, 1996, “The Honorable Richard W. Goldberg, Judge, United States Court of International Trade, sitting by designation, embodies the federal regulatory policy of the FTC that is protected by the courts, I quote, in part, from this decision:

    “A plaintiff should not be permitted to plead violation of FTC regulations as part of a state common law fraud case. A decision to the contrary could be interpreted as substituting violation of FTC regulations for state law requirements, thereby effectively extending a private cause of action under the Federal Trade Commission Act.”

    As indicated above, in my comment, the FTC Rule governing franchise sales presumes that there is no fraudulent inducement to contract if the franchisor is compliant with the rule. And, even when the franchisor is not compliant and there is a substantive violation of the rule, this is not “fraud” but merely an administrative violation of the FTC Rule for which only the the federal and the state governments have the standing to sue or settle. Catch 22!

    Obviously, public policy has been developed to protect the potential of franchising in the economy, and this potential would be threatened if failed and failing franchisees could prove fraudulent inducement to contract in private lawsuits in the courts.

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  16. Carol Cross says:

    Currently there is NO GOVERNMENT research available on franchising and franchise failure other than SBA Statistics and the Coleman Report, etc. The SBA default statistics do not present a true picture of the failure rate of the “founding” franchisees in systems because there is no reflection of those loans, other than SBA loans, (home equity or 403 loans) that have defaulted, and no reflection of the thousands of startup loans that continue to be serviced by failed franchisees who were able to avoid bankruptcy and surrender of their collateral when they gave their businesses away in fire sales to save themselves from financial ruin.

    Apparently, the SBA software programs haven’t always separated out franchise loans from independent small business loans.

    Currently, the banks and lenders have indicated that they don’t want to lend to franchisors who are demonstrating more than a 10% failure rate of franchisees. But, the banks and lenders will still not have the true failure rate available when franchisors successfully churn franchisees through third-party fire sales that appear merely in the FDD as “transfer-sales” that remain in the service of the franchise system.

    The government, itself, the Dept. of Commerce, appears to have stopped gathering its own statistics in 1988 and since then, private sources like the Fran Data, who also manages the SBA Franchise Registry, appear to be the source of statistics that are provided to The Congress and to the public by the International Franchise Association (IFA).

    Isn’t there a conflict of interest in having private corporations, who profit from selling research on franchising, gather “objective” statistics which are used by The Congress of the United States to make policy decisions?

    If the SBA default list is routinely made available to banks and lenders, why isn’t it routinely provided to those citizens who apply for guaranteed franchise loans?

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  17. Carol Cross says:

    More on The Peaberry Coffee scenario! Looking in from the outside, we see that the summary judgment has been appealed to the Federal Circuit Court of appeals, and that both the International Franchise Association (IFA) and the American Association of Franchisees and Dealers (AAFD have submitted amicus briefs to the Court.

    I read somewhere that oral arguments will be heard this month. I have read both of the amicus briefs.

    It appears to me that the IFA amicus brief defends the defendant’s (admitted?) failure to disclose material information to the plaintiffs as not actionable on the basis that they have complied “technically” with disclosure under the terms of the FTC Franchise Rule and are not in violation of existing law(s).

    It appears to me that the AAFD amicus brief points out that the premeditated withholding of material facts from the buyer by the franchisor is fraud that isn’t protected under law and public policy. It appears to me that The AAFD brief points out that it wasn’t the intent of the FTC Franchise Rule and regulatory policy to protect franchisors in the pre-sale disclosure process from the consequences of fraudulent concealment of material facts from good faith buyers of franchises.

    It will be interesting to read the opinion of the Court. In the future, all prospective franchisees will be affected either negatively or positively by the decision of the Appeals Court in this matter.

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  18. Carol Cross says:

    New information re the Peaberry Coffee Litigation and the Appeal!

    The 10th Circuit Court of Appeals published their opinion (Court of Appeals No. 09CAO130) on their website on February 18th, 2010. The Judgement was affirmed in part, vacated in part, and the Case was Remanded with directions to the District Court.

    Obviously, the Appeals Court protected and affirmed as much as they could of the judgment of the District Court that gave the entire victory to the defendants and that had dismissed ALL of the claims of the plaintiffs. However, in view of the case law and res judicata ( since the promulgation of the FTC Franchise Rule in 1979) the Appeals Courts necessarily affirm the judgement of the lower courts whenever possible.

    Existing case law does protect franchisers from claims of fraudulent inducement/concealment in the sales process as long as the written UFOC/FDD and the language of the contract disclaims that any PROFITS have been promised to the new buyer of the franchise –and the buyer of the franchise agrees under CONTRACT to buy the franchise under these conditions and agrees that they are not relying on any statements made outside of the contract or the UFOC/FDD when completing the purchase of the franchise.

    However, Judge Robbins of the District Court Judge did find in the original trial that a “material” existing fact(s) was withheld in disclosure from the buyers of the franchise –perhaps over and above what is required to be disclosed under the FTC Franchise Rule — and, therefore, based on this finding, the Appeals Court did “vacate the judgment dismissing plaintiffs’ third claim against the Peaberry defendants to the extent that it alleged FRAUDULENT NONDISCLOSURE of the parent company’s historic losses……”

    On remand, Judge Robbins has been directed to deliberate on the legal ramifications of this “fraudulent nondisclosure” (which is different than fraudulent inducement) as explained by the Court as, perhaps, over and above what is required to be disclosed under existing law to determine whether or not a duty existed under common law to disclose the material fact and whether or not the facts surrounding the nondisclosure suggest that the defendants are guilty of “fraudulent nondisclosure” or “negligent nondisclosure” under common law.

    Unfortunately, for franchisee plaintiffs, ALL of the elements of common law fraudulent non-disclosure will have to be proven, and the judge will have to look at these elements when he makes his final judgment. ( Not any case law available on “fraudulent nondisclosure” in the context of franchising and disclosure under the FTC Rule that I can find but I am not an attorney, of course)

    We can only hope that the lower court on remand will now ask “What is the purpose of Franchise Regulation”? And ask the question “Should franchisers be permitted to KNOWINGLY sell proven UNVIABLE franchises to the public under cover of ineffective and captured regulatory policy?

    We can only ask that the lower court in good conscience will investigate and understand the difference between selling an unprofitable franchise and in “knowingly” selling a “proven” economically unviable business concept, as demonstrated by the facts of this case.

    Obviously, there are thousands of “viable’ franchised businesses who never earn any actual profits over and above their overhead and operating expenses for their owners but the buyers of franchises certainly should have a right to rely on the premise that the business format and concept that is being franchised and sold to the public has potential value and is currently viable and offers the potential for profits.

    Will Judge Robbins make “new law” or take the easy way out and surrender to the status quo? Prospective franchisees need this conversation. At any rate, whatever the Judge decides is open to appeal by any party! But! can the franchisees afford to further litigate this matter if the decision again goes against them?

    We can only wait and see. The Courts are open to the public for a reason and it is our duty, as citizens, to try to understand the law that belongs to the people, and not just to the special “business” interests. Our forefathers understood the necessity of the jury trial in civil cases in order to protect the essential rights of the people in business matters. However, jury trials in franchise matters are discouraged and, as in this case, it is the judge in his discretion who decides the matter. .

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  19. Anonymous says:

    please update

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  20. Les Stewart says:

    Update?

    I may be out of touch, but I think all of my conclusions are still valid. The AAFD may or may not be competing with the IAFD but that is so irrelevant. New letters to serve the franchise bar.

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  21. Carol Cross says:

    Nothing new in a Google Search on the Peaberry Coffee Remand to the Denver District Court. Who knows what is going on behind the scenes?

    Is it likely that the courts will make new case law that will require franchisors to disclose negative material information to new buyers of their franchises beyond what is NOW required by the FTC Rule and the State FDD’s? The Integration /Reliance Clauses that permit Franchisors to protect themselves when indulging in intentional torts and fraud have been upheld by the Courts in the past many years.

    I agree with Les Stewart! All organizations that pretend to represent the interests of the individual franchisee in this hybrid legal relationship called franchising are really only protecting the hybrid legal relationship, the model, because the model serves the financial interests of the BAR and the survivors of the franchise model of doing business.

    http://thegreatfranchisingrobbery.blogspot.com

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  22. Carol Cross says:

    Interesting Article from the International Law Office entitled “Is the franchise disclosure document enough? Have a look at it! It is a review of the Colorado Coffee Bean, LLC v. Peaberry Coffee, Inc. litigation and remand.

    The article indicates …”the open question remains as to whether a franchisor that complies fully with the franchise disclosure regulations can still be subject to liability for failure to disclose additional information outside the franchise disclosure document.””

    Of course, lots of intentional torts and frauds have been committed under cover of FLAWED regulatory policy governing presale disclosure. It appears that the courts have taken the position that it doesn’t matter what the quality (if any) of the franchise sold to the public as long as the prospective franchisee signs the contract with the acknowledgement and reliance clauses in place, which have been protecting franchisors from claims of fraudulent inducement in the sales process.

    But! Certainly the Courts should look at “Silent Fraud” because they must know that prospective franchisees, if they knew, wouldn’t buy franchises that have a high rate of failure of first owners and/or low profitability. Was the statement of basis and purpose to franchise rule in 1978 a lie?

    The long-standing flaw in the disclosure law governing the sale of franchises needs to corrected in the interests of honesty and integrity and freedom and justice for all! In my opinion, those who have used the “flaw” to commit silent fraud should be punished!

    http://thegreatfranchisingrobbery.blogspot.com

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  23. Ray Borradale says:

    One would presume that while a franchisee may NOT be able to pursue a franchisor for fulfilling disclosure requirements such a franchisee having been duped into a fraudulent business risk could pursue the franchisor on more appropriate grounds. All one might need is a free QC, a free barrister and couple of free lawyers and take your own lunch.

    So where is the problem Carol?

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  24. Carol Cross says:

    Tongue in cheek! The problem is that only a very small percentage of fraudulently induced franchisees make it to the courts. They can’t afford it. No contingency arrangements in franchise litigation. The problem is that everyone talks AROUND the REAL problem —-i.e. the hiding of the risk from new buyers of franchises who are UNINFORMED of the risk by those who profit from the ignorance of prospective franchisees. Nobody wants to dry up the pool of cheap venture capital and cheap labor provided by uninformed Mom and Pop buyers who are looking for a means of earning income.

    This model of business has inspired the biggest “confidence game” in the history of capitalism. Unfortunately, governments find it convenient NOT to have objective data on franchise failure and franchisees continue to be lunch and dinner for the franchisors and the powers that be who profit from the lack of disclosure of risk in the pre-sale process.

    At least in Australia, there is lots of noise and you have some brave and courageous elected officials who speak up for the franchisees. Here in the US, there is no noise, and the Internet and sites like Blue Mau Mau are not interested in inspiring any noise about the KNOWN FLAW in the federal and state regulation of the sale of franchises to the ignorant public. The red herring of the FTC Rule and the state FDD’s is advanced as disclosure to prospective buyers while in reality, it acts to provide COVER for fraud.

    http://thegreatfranchisingrobbery.blogspot.com

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  25. Carol Cross says:

    The Great Franchising Robbery continues into 2011.

    I had hoped that the CNBC Documentary on Franchising would result in some public pressure to clean up the dishonest regulation of the sale of franchises to the innocent public. I hoped the FLAW in the FTC Rule governing the sale of franchises would be fixed! I hoped that “Churning and Turning” and “pumping and dumping” of innocent franchisees would be uncovered and that the public would be outraged.

    But! Instead! this “soft” Documentary was pulled from normal rotation by CNBC after they received a threatening letter from Robert Zarco, a wealthy and famous defender of franchisee victims, who was hired by the franchisor of Cold Stone to defend the image of Cold Stone — and to protect the “surviving franchisees” from unfavorable publicity about Cold Stone Management which might, or might not, impact the franchisees and the franchisors sales negatively?

    If CNBC continues NOT to release this documentary, will this be because it wasn’t the truth and they are guilty of defamation ? — or because there is no profit or gain in telling the truth about franchising and dishonest regulation for anybody, except for the prospective buyers of franchises, who might be watching the documentary?

    We have to wait and see! Don’t we! — before we can know whether “truth” and “first amendment” rights and the concept of a “free press” will trump the “profit” motive.

    http://thegreatfranchisingrobbery.blogspot.com

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  26. Anonymous says:

    Here we are —–almost into 2013 and NOTHING has been done to stop franchise “churning” and “fraud” made possible by the deliberately (in my opinion) ineffective FTC rule that encourages and protects “fraudulent inducement of the sale of franchises” to the innocent public.

    When all three branches of government protect public policy goals that encourage fraud, the fraud continues and innocent victims who spill their blood in the Halls of Congress are ignored by those in Congress who justify their lack of action to protect the victims as a means of protecting “the greatest good.”

    All of the recent court decisions protect the status quo that protects the “fraudulent inducement in the sale of franchises” because I believe they are worried that any decision that would change the status quo would undermine and endanger the franchise “section” of our economy and not work for the “greatest good” of the economy —-which is so important to the greatest public good.

    Unfortunately, in view of the spectrum of human nature, the law is the only human source that keeps us from eating each other, and, therefore, the only human source who determines who can legally eat another person to achieve public policy goals.

    May God give wisdom to our leaders and protect our country from going the way of Rome and other civilizations who put the laws of men before the laws of God. .

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  27. Eblen Carol says:

    Here it is —-almost 1913 —and the fraud and churning (to include 3rd party straws) in franchising continues uncorrected and unabated because, in my opinion, the dishonest and ineffective FTC Franchise Rule intentikonally protects and encourages the fraudulent inducement in the sale of franchises to the innocent public as a means of serving the misguided public policy goal of “the greatest public good.”

    Obviously, when ALL three branches of our US Government cooperate to protect the FTC Franchise Rule, we have to understand that the economy has never been healthy enough, in the eyes of the Congress and “the powers to be” to correct the “flaw” (acknowledged by all) in the FTC Rule in order to protect the first investor franchisee at the bottom of the financial pyrimid from losing everything he/she has —-often including their health and sometimes their lives.. .

    All of the recent decisions in the higher courts protect the FLAWED FTC Franchise Rule and the current status quo of the public policy goal to stimulate the economy with as many new small businesses as possible —-even if they are unsustainable for the innocent FIRST franchisee investor whose life’s savings can be churned to another small investor for pennies on the dollar.

    May God give wisdom to our leaders and our judges when they feel they must defy God-given laws to protect “the rule of Law” devised by men to protect the special interests and greedy and un-Christian and Un-Jewish and Un-Muslim, etc.. Capitalism that put profits before human life and human rights. .

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  28. Carol Eblen says:

    Here we are in 2014 and the law of the land —-all three branches of government, are still permitting the fraudulent sale of franchises to the public and still rationalizing it as serving the public good.

    Apparently, our economy has never been good enough that the government can protect franchisees from being merely the innocent victims of the franchisors whose cheap labor and venture capital is needed to grow the franchisors’ profits and the franchisors presence in our economy.

    I tried to stop this for many years —-especially the cheating of our veterans returning from service and our retired military veterans.

    I read today on Blue Mau Mau Franchise News that there are still some franchisors pretending to try to clean up franchising. where A cheated franchisee, apparently a Veteran, is trying to protect our Veterans from being targets of the franchise fraud that becomes possible when they buy franchises that are condoned by Vet-Fran and the International Franchise Association (the IFA).

    He is trying to start a petition on Change.org but it will be hard to get enough cheated franchisees to sign this petition if this news appears only on Blue Mau Mau, won’t it? .

    .

    Like

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