Pattern recognition: Franchising as a powerful new technology

I have observed many things in business.

The consequences of franchising are profound.

On the individual, group.

There are, however, Rules of Franchising.

One Response to Pattern recognition: Franchising as a powerful new technology

  1. Carol Cross says:

    Ah Yes! Franchising as a powerful new technology! Is Franchising an Industry or a somewhat new manner or way of doing business in which one party holds all of the aces? What do smoke and mirrrors and intangibles have in common?

    Many bloggers refer to franchising as an industry! Michael D. Moberly, on Sep. 14, 2009, said “The question whether franchise operations are driven (more) by conventional intellectual property (IP) or by other intangible assets probably represents, for some anyway, a clasic case of ‘a diference without a distinction’. The franchising business model is characterized as a service industry driven by licencing of patents, trademarks, service marks, copyrights, and trade secrets.”

    Obviously, in the US, when the FTC promulgated the Rule on Franchising 30 years ago, they wanted to encourage franchising and “the powers that be” wanted also to protect the emerging markets in intangibles as worthy investment venicles. Obviously, the contracts of sale of the franchises (dubbed franchise agreements) had to be “invincible” and would have to establish the absolute power of the franchisors over the franchisees for the long term of the contracts.

    The guile of the FTC Rule and the binding and unilateral contracts packaged together with the government disclosure document that protects franchisors from rampant misrepresentations outside of the contract, and from omissions in disclosure of material facts to new buyers has resulted in the great growth of franchising we have seen these last 30 years.

    Where businesses used to use licensing as a vehicle to grow their business, they were encouraged 30 years ago to understand that franchising provided greater advantages over licensing because, of course, the franchisor gets to control the assets of the franchisees to his advantage, and the franchisee has “no private right of action” no matter what the franchisor does or doesn’t do, under the FTC Rule governing franchisors.

    The “beast” has been created and wanders across the globe perpetuating itself on the flesh of those whose “need” and trust and confidence in appearances lead them to a bad end! Many just fade away into obscurity — silenced and exhausted — and ashamed that they failed — not knowing that it is the system that failed them!


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