The science of persuasion

Robert Cialdini‘s work is important to understand.

His 6 Weapons of Influence:

  1. reciprocity, (giving a United Way pin)
  2. scarcity, (limited quantities available)
  3. authority, (basketball shoes)
  4. commitment,
  5. liking  (Tupperware example) and
  6. consensus (social proof).

Understanding these techniques goes a long way to understanding franchising.

Advertisements

3 Responses to The science of persuasion

  1. Carol Cross says:

    YES! And in franchising, the technique of advertising and selling your product on the “you get what you see” basis has been perfected and perverted. How is it that franchisees are persuaded to invest their life savings into “pig” and “dog” franchises that are the worst gamble of their lives?

    On one hand, the buyer is persuaded by aqppearances and oral statements and current visibility of the franchise system that the system is “proven” –On the other hand, there is NO transparancy of unit performance in legal disclosure required by law. The seller of the franchise, who profits, passes the obligation to disclose positives and negatives of unit performance off to current and former buyers of the franchise.

    This “unusual and unfair” subsidy of incomplete disclosure kills but is ignored by the legal profession and the courts.

    The churning and turning and pumping and dumping within the systems are invisible to the human eye and the prospective franchisee doesn’t get what he thinks he sees and has no legal recourse when the so- called “proven” model fails.

    The attorneys and the judges are persuaded that the “losers” — the franwads –get what they deserve because they didn’t due their “due diligence” effectively in the flawed disclosure process!

    http://thegreatfranchisingrobbery.blogspot.com

    Like

  2. Carol Cross says:

    I recently listened again to an All Business Pod Cast on Franchising where the participants discussed “whether or not “earnings claims” should be mandatory for franchisors?” I am not persueded that the participants intentionally ignored the flaw in regulation, i.e. the FTC Rule and the State FDD’s.

    Of course, THEY SHOULD BE MANDATORY because this information is of vital importance to the prospective franchisee.

    One participant, whom I believe is NOT an attorney, but a financial expert, explained that the FTC looked at this issue in 1979 and again in 2007 and decided that mandatory disclosure of earnings could be misleading for franchisees??? He didn’t go on to explain how the failure to make an earnings claim protects the franchisors from claims of fraudulent inducment in the sale of the franchises to a naive and uninformed public.

    That is: Misleading or false statements as to past performance are generally not actionable as fraud if there is a disclaimer AND forward looking statements are not actionable as fraud. ONLY mistatements of currently existing facts are actionable as fraud.

    The franchisors use the advertised and “unproven” startup costs as the carrot and make no statements of existing facts concerning UNIT financial performance of the system in the mandated disclosure document and in the franchise agreement.

    The FTC created a safe haven for the franchisors to protect them from claims of fraud when “earnings” became an option for the franchisors Only a very small percentage of franchisors pick up their option to make an earnings claim

    Like

  3. Carol Cross says:

    I recently listened again to an All Business Pod Cast on Franchising where the participants discussed “whether or not “earnings claims” should be mandatory for franchisors?” I am not persueded that the participants intentionally ignored the flaw in regulation, i.e. the FTC Rule and the State FDD’s.

    Of course, THEY SHOULD BE MANDATORY because this information is of vital importance to the prospective franchisee.

    One participant, whom I believe is NOT an attorney, but a financial expert, explained that the FTC looked at this issue in 1979 and again in 2007 and decided that mandatory disclosure of earnings could be misleading for franchisees??? He didn’t go on to explain how the failure to make an earnings claim protects the franchisors from claims of fraudulent inducment in the sale of the franchises to a naive and uninformed public.

    That is: Misleading or false statements as to past performance are generally not actionable as fraud if there is a disclaimer AND forward looking statements are not actionable as fraud. ONLY mistatements of currently existing facts are actionable as fraud.

    The franchisors use the advertised and “unproven” startup costs as the carrot and make no statements of existing facts concerning UNIT financial performance of the system in the mandated disclosure document and in the franchise agreement.

    The FTC created a safe haven for the franchisors to protect them from claims of fraud when “earnings” became an option for the franchisors Only a very small percentage of franchisors pick up their option to make an earnings claim.

    http://thegreatfranchisingrobbery.blogspot.com

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: