People need to think of themselves as unmanaged, independent and free, if they are to be controlled with maximum success. John Kenneth Galbraith
The story coming out of Blue MauMau is that franchisees are the authors of their own misfortune in several dimensions.
- They’re stupid in not doing what is seen as Killer Due Diligence and therefore deserve their fate (even though the Three Wise Men admit that franchisor opportunism cannot be controlled, avoided, let alone predicted on a pre-sale basis).
- Proof of their stupidity is that there are few independent franchisee association, IndFA around.
- Franchisees compound their lack of intelligence and sloth by not having a franchise bar member manage their independent franchisee association, IndFA.
- Proof of their lack of intelligence is them not spending $.27 per day on some mythical national pro-franchisee lobby effort (the “Let’s not just match but outspend GM+Toyota+Exxon” public policy argument).
Conventional Wisdom: many manifestations of stupidity, one source of stupidity (ie. franchisees).
- I would suggest this is 180 degrees wrong and that franchisees dance like white men because of the cash flow relationships within Big Franchising.
It is my expereinece is that the formation of grups happens along this way:
1. Two, three franchisees grab a few brown pops and start shooting the shit. They figure out they’re not crazy about their concerns and start working out some information sharing between themselves. They start scratching down some numbers on a wet bar napkin and start wising up to how far they’re bending over. Some sober up and continue emailing each other.
2. Other franchisees hear about what Tom, Dick and Harry are doing and want to join in. There are larger group meetings at kitchen tables: Real benefits, great value.
3. One of the still extremely effective but non-directed group mentions that they ought to get some legal advice.
4. They get some $ together and call a franchise bar lawyer who claims to represent franchisees’ interests. The franchisor lawyers up; the franchisees lawyer up. The more money that is spent with the lawyer, the tighter the bonds become to that service provider.
5. The association grows but just seems to fizzle after the initial war chest is used up in legal dances.
- The allegations of stupidity are used to disguise the franchisees’ lawyers role as shepherd. It’s a well-choreographed dance. A false-justice show for the crowd: A conjurer’s trick to maintain the illusion of a balanced industry.
- Let’s not forget that all lawyers are susceptible to cheating because they provide credence good services: franchisees can’t tell if they’re being ripped off.
Franchisees think that by hiring a franchisee “white knight” lawyer that they will continue solve their business problem. Not one of the corporate guys but their “sworn enemies” the ones that scratch themselves and cuss to show how deep they’re into the franchisee brotherhood.
- Why would franchisee lawyers solve (rather than massage) your problems when that would decrease their future cash flows (reputation as an unmanageable in a near-monopoly of professional services)?
Proof: Who is telling you [post-signing] to talk to a franchise law expert rather than an experienced regional lawyer? (It’s the same party saying to come talk to their Ombudsman, btw.)
- The national franchisor trade association or their captured bankers, consultants, government agencies, etc.
No wonder franchisee groups flounder: They’re sabotaged every day by their own contracted legal providers (see infanticide).
- The solution is to grow the IndFA while avoiding being eaten by the Wolf in Sheep’s Clothing lawyer.
- Research indicates you avoid overpaying credence good providers by paying separately for (1) diagnosing the problem and, if needed, (2) contracting for services to solve the problem. The Franchise Bar members insists on doing both (diagnosing and providing service) which is a very dangerous situation. They also will NEVER deal with an IndFA that is also being currently advised by an independent franchise consultant (control issues should not be significant if everything is on the up-and-up: but it isn’t).
- I only diagnose, advise and support the IndFA’s executives in their relationships to their sub-contractors (lawyers, accountants, media, web designers, insurance providers, etc.)
The businesspeople should wag the wolf’s tail, not the other way around.
Postscript: Since writing this 9.5 years ago, I have received zero referrals as a resource via the Franchise Bar in the face of 5,000 ON lawsuits per year. June 201