Franchisor influence defangs any Watchdog

WatchdogsA new franchising tribunal will quickly become ineffective.

Modern politics is the winner-take-all brokering of interest exercise.

One interest group opposes another.

The winner doesn’t take “most” of the lawmakers attention: they get 100%. Those with the most gold, make all the rules.

The pretense of fairness is preserved through useless measures such as disclosure documents, toothless watchdogs and the illusion of private legal action.

  • Franchisors and their supporters (Big Grocery, Oil and Auto, the franchise bar and bankers, etc.) are experts at influence peddling.
  • Franchisees have never been and never will be a credibile threat in this arena (out-influence an auto assembler…right!!)

More disclosure just perpetuates the false sense of security. Relationship laws don’t work because the franchise bar’s monopoly is almost unassailable. Watchdogs such as the FTC and ACCC are quickly neutered and stay that way.

The only solution is prohibition until the industry offers a less toxic product.

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5 Responses to Franchisor influence defangs any Watchdog

  1. Carol Cross says:

    True! Prospective franchisees don’t understand that there is NO Political Action Committee (PAC) protecting them in the Halls of Representative Government until much TOO late to be saved from the franchise contract from hell. They have no way of knowing or understanding the “toxic product” they are buying, until too late.

    Prospective franchisees certainly don’t understand that they are generally signing away their legal rights to due process of law under these contracts and that they are legally deprived of true disclosure of the risk and possible rewards of their investment before they sign the agreement.

    They don’t understand that the average franchise agreement, the binding contract, is a legal means of preventing any kind of “collective” bargaining after the franchise agreement has been signed and delivered. This is why the franchise model is so attractive to franchisors. It does generally eliminate labor problems with the franchisee who, in turn, is responsible for any labor problems with his employees in the production of gross sales. The franchisor reserves his right to “fire” the franchisee but the franchisee has no rights to “fire” the franchisor because the franchisor “premeditatedly” makes so few promises in writing that it is almost impossible to find a breach

    While the franchisor always reserves the right in the contract to make changes in the contract terms with the agreement of the franchisee, the franchisee has no rights to make changes in the franchise agreement and the contract presumes that franchisees will deal with their franchisor one-on-one at all times under the unilateral terms of the agreement. Franchisees really have no way of knowing whether other franchisees are operating under more favorable terms; and, this is apparently legal.

    Obviously, regulation is promulgated by those who are regulated and our elected officials seem to be busy making new laws that legitimize all kinds of thievery in the interests of what they are told is “the greater good.”

    But! I know, Les, that you are not suggesting that we do away with the concept of the “prospectus” and all regulation. I believe that the only solution in franchising is that the franchisor, himself, be mandated to disclose or make available the “unit” financial performance statistics of the systems — that would be required in my country if franchises had been regulated under the auspices of the SEC, instead of the FTC, and a prospectus was required.

    I guess if “the powers that be” want to promote and encourage franchising without providing a “prospectus” — the offering circular, the so-called disclosure document proscribed by the FTC, is the solution. No doubt that the ABA has backed and supported this ineffective regulation in their own interests. (I made comment on the Minnie Pearl Chicken Franchise Fiasco on my Blog “The Great Franchising Robbery” but you haven’t responded) Would it be possible for you to publish my blog on your site? I don’t really understand how all of this works in a technical sense)

    The Internet and sites like yours may lead to a less toxic product —and we share this goal!

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  2. Les Stewart says:

    Carol,

    I do, precisely, mean we should do away with all disclosure or prospectus regimes.

    All of these measures give a false sense of security because naive people assume that educated, professionals would not misrepresent by their actions and inactions a clever but deeply cynical deception.

    Good people assume other people are good.

    The only solution is what I just did to a telemarketer:

    I listened for 10 seconds and then stated “thank you very much but I am not interested: Please take me off your telephone list” and then I hung up.

    Refusing to deal with a known hazardous product is the only way to send the message to the manufacturers: smarten up.

    Half-measures send mixed measures.

    Les

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  3. Carol Cross says:

    Refusing to deal with a “known hazardous product is the only way to send the message” but how will the public find our how hazardous franchising is to their financial and emotional health.

    There are millions of positive statments about franchising and the joys of a “business of one’s own and the implied earnings and profits claims may be false but they are all over the network and appear to be protected under the current status quo of the law.

    How can you be sure that your site that warns of the dangers will be enough when and the other Internet Sites like Blue Mau Mau and Franchise Pick, etc… will spread the word but they also want to promote franchising?

    Isn’t saying there should be “no regulation” because it does no good like saying there should be no red lights because people will run them when nobody is looking?

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  4. Les Stewart says:

    Carol,

    I believe that bitter real medicine is better than sweet false hope.

    People that refuse to accept what all life offers (“useless” pain, bad things to good people) are refusing to live and putting themselves too near the head of the table.

    Life is a mystery and I have only learned by being driven to my knees. I am exceedingly lucky: to gain a more accurate view of life’s beauty and its horror.

    Whatever I do is nothing but the impulse that I imperfectly manifest can do anything. I have faith but certainly not in any creature.

    To lose one’s life savings is nothing. It wasn’t yours to begin with. There are resources in the darkest night accessible to anyone who cares to look where others have looked before.

    These truths have been taught for as long as man, alone, has known he will die one day. You pass this way only once and you better get to the higher rock or get swept away by the fools wishing for a nice warm summer shower but no lightning.

    Les

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  5. Carol Cross says:

    He, who helps himself helps God. God’s Will Be Done on Earth as it is in Heaven.

    But the Will of Man is reflected in the Rule of Law and when the Rule of Law is manipulated and perverted to unfairly serve only those with the greatest influence on the promulgation of rules and regulations and the law, aren’t we lost when we don’t fight back and try to help ourselves and others? Isn’t this God’s Will?

    If slavery and child labor and exploitation of labor had not been contested and exposed as unconscionable, wouldn’t we still be living with these ugly realities today?

    Is your point that we still do have the same ugly realities today in a different form today and there is no point in fighting back because nothing will change because human nature when incorporated under the banner of Capitalism is ugly and explotive? (Can’t wait to see Michael Moore’s new movie)

    You, Les Stewart, have devoted a great deal of your life to fight back and to try to disclose the ugly reality of the franchise model. How can you suggest that there is no merrit in trying to expose the real purpose of regulation and either abolish specific franchise regulation or pass more effective franchise regulation that will disclose the risk and the rewards of the investment to new buyers — in terms of transparency of historical unit performance statistics of the units within the system?

    You did at least get a private right of action for franchisees for violation of franchise regulations in Ontario that should somewhat reduce fraudulent inducement in Ontario but we in the US have no private right of action for fraudulent inducement/concealment of material facts.

    Onward, Christian Soldiers!

    Like

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