Franchisees often deny reality to keep hope alive

DenialHope is a fragile thing.

You can only suffer now in the hope of profiting later.

You keep going, day in, day out, hoping there’ll be a pot of gold at the end of the rainbow. Hope is sometimes all you have when you’re renting a zombie franchise (deadbeat; the living dead).

They lied about margins, growth, product costs, being a member of the “family”, a partnership, profits, capital needed…

But they wouldn’t lie about the exit $, would they?

lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie truth lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie lie

When a resolute young fellow steps up to the great bully, the world, and takes him boldly by the beard, he is often surprised to find it comes off in his hand, and that it was only tied on to scare away the timid adventurers. Ralph Waldo Emerson

4 Responses to Franchisees often deny reality to keep hope alive

  1. It is hard to get prospective franchisees to focus, at the beginning, on their exit strategy.

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  2. Les Stewart says:

    Michael,

    Your comment is true of prospective franchisees but I think a professional’s duty is not met if the ROI over the entire life of an investment is not discussed.

    The franchise bar wants to benefit from the revenue accruing from being seen as industry experts but have traditionally been unwilling to be held responsible for the completeness of their advice.

    Franchising is a specialty of law much like neurosurgery is a specialty of general surgery. The standards of care are much higher for medical specialists but not for law.

    It’s about time $ matched fiduciary duties in franchising.

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  3. Les, unfortunately advising a prospect about the business risks of a franchise is something many attorneys will simply not do. Their position is that they are not allowed to advise about business risks, only legal risks.

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  4. Les Stewart says:

    Michael,

    I appreciate that is the state-of-the-union situation for legal advice but I believe that is an irresponsible and shortsighted approach that has seriously damaged both the credibility of the bar and the industry.

    Home inspectors can be held liable for their advice.

    But professionals can opt out of any liability on thousands of life savings-magnitude investments each year to knowingly-naive business investors?

    Sounds like there is zero justification for confidence in talking to a lawyer about anything, which is a significant source of inefficiency and lack of investment in any business in North America.

    GM, AIG, Quiznos, the franchise bar, lawyers…all breed a level of investor distrust in North American commerce (versus EU, UK, AUS) that drives down SME entrepreneurial activity as documented by Dr. Shane.

    Like

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