Career advice from Ray & Carol

Dear Carol and Ray,

People are spreading rumours that I am an untrustworthy, obsessed and unbalanced person.

Should I write a book or continue to be black-balled?



6 Responses to Career advice from Ray & Carol

  1. Carol Cross says:

    You know, Les, that if you tell the truth in your consulting work to franchisees, and you DO, and give sage advice because you understand that the law itself is stacked against franchisees —-you will be black-balled by ALL of those who profit from the “stacked deck.” Those attorneys who want to litigate against the “stacked deck” and “stir the pot” will not thank you for discouraging litigation and reducing their legal fees. The first time the attorneys can show you a “Class Action” wherein the franchisees have successfully collectively bargained and were able to Redress the Harm done to them, maybe you can play on the team!

    If there was money to be made in EXPOSING franchise fraud and opportunism, by the franchisors, the legal profession, the banks, etc.. as in “writing a book” —and someone would publish iit and CNN or CBS or PBS or CSpan would do book interviews — I’d say — Go for It!

    But! In truth—the “powers that be” would burn you and the book! You need someone like Michael Moore to tell your story or Bill Maher who thinks fat-fast-food franchises suck, I think!

    The title for your book could be “Franchising Really Does Suck and IS for Dummies!

    Keep up your good work! You make it possible for some sun to excape through the cracks. You are my hero!


  2. Carol Cross says:

    That’s Chicago “lingo” for “escape” in that last sentence, above!’

    PS! Thanks, Les, for the education and the “understanding” that I have reached because of the “subjective” truths only actually underatood through the understanding of the “experience” and the trip I have taken with you these past four years!


  3. Ray Borradale says:

    When you are reachable and affordable then the franchisee casualty market is massive and much larger than that tiny little spec that can afford a lawyer. When you have a broad background in franchising you tend to review the volumes of volunteered information with broad considerations based on firsthand experience in many aspects of franchising.

    I’m the first to admit that as to any legal interpretation of any franchising case I’m not a lawyer and therefore my opinions are unreliable, however, you don’t have to be a lawyer to evaluate outcomes and when the outcomes suggest the laws and regulation is flawed and that the degree of power abuse in franchising dominates.
    Whenever anyone advises that franchising in total is too dangerous to risk everything, even many supporters of reform howl down such an opinion.

    I will go along with placing the obvious frauds in a box over in that corner and I will agree in placing historically successful franchises in a box in another corner.

    Now when I size up what I suspect is the rest of franchising I have to rely on years of free information that suggests that within those franchises lurks lesser degrees of power abuse. In most the franchisees seem to be aware they are being ripped off but given the known casualty outcomes from conflict they plod through their term and get the hell out or at least hope to.

    The problem with those franchises not specifically, to me at least, categorized as total scams, is that they seem to always be progressively learning from what they get away with. The more they get away with the more they want to get away with more and then they join the ranks of the obvious frauds while new ‘golden opportunity’ franchise models come on the scene and move up/down the rankings.

    So you have obvious frauds and those soon to become obvious frauds. Now head on over to the historically successful franchises for a breath of fresh air and have a closer look. Most are not as relationship friendly as portrayed and realistically this is business so to expect cuddles is a little silly. So let’s look at what can go bad with a good franchise.

    In my opinion the two things most to be feared with all the fear than can be mustered are logical and obvious.

    There is a rapidly escalating trend in franchising where franchisors are selling up to faceless and large investment companies. When that so typically happens franchisees only exist as data entry on a financial spreadsheet where speedy return on new franchisor investment has to be maximized and almost always in the fastest time.

    Enter the myriad of power abuse opportunities that underpin franchisor super profiteering and there you have it. Another franchise gets thrown in the box labeled ‘obvious frauds’.

    The second fear with prime franchise brands is when the concept changes to adapt to evolving markets or other out of control influences leaving the franchisee financial model as decaying and eventually unviable. Look to the new-age, ain’t going away, trend of franchisors competing on line with franchisees.

    Look to the combined incremental influences of landlords, particularly shopping centres, and those of the franchisor that increasingly erode the viability of a franchisee financial model. New technology can and odes undermine franchise concepts based in old technology where adapting is not possible for sometimes and potentially too many reasons to mention in a brief rant.

    Franchisors with a choice to either modify their financial model to prop up the franchisee financial model or allow the decay typically prefer the spoils of churning.

    There are brands out there today and there were brands out there yesterday that found they were between a rock and a hard place. To fix the franchisee model is impossible without removing franchisor revenue streaming where such an act would destroy the franchisor. To keep the franchisor plodding along means franchisees are falling off the edge and then the franchisor usually later rather than sooner realizes that not being able to sell dead locations or new contracts is going to destroy it anyway.

    It should be pointed out that big name brands and ‘family owned’ can come under all the same perverse influences with the same perverse opportunities available. Small brands don’t need much to push them over the edge when they need a buck. For large networks a 1% rip off of franchisees is some serious dollars. Get a 1% stream easy and then 2 and then shoot for 10. Why not?

    As an afterthought I’ll add incompetence. A recent example in Australia saw an entity holding a number of diverse franchise brands collapse. These franchisor lads had access to big funding and inside knowledge of what brands were vulnerable to takeover.

    They chose franchising because it appeared easier than conventional business given the power of the contract to utilize and then strip small investor capital. These guys were very capable in their chosen field of insolvency and profiting from the sale of failing businesses but they were incompetent when it came to selecting and managing anything resembling a winner. How embarrassing.

    So my career advice is to get into franchising now; preferably as a franchisee and preferably in a system that is an obvious fraud.

    Getting that experience out of any investor’s system will leave them more time to lead a healthy life. Unless the franchisee investor is a masochist and prefers to exit into the thankless domain of the ‘untrustworthy, obsessed and unbalanced’ nut jobs who give a damn about even stupid people. Franchising isn’t going away in my lifetime so what’s wrong with trying to fix a few problems and expose a few aholes?

    Les everyone gets insulted in franchising. It is just that sort of business but a new trend is changing the approach to warding off nut jobs. It seems that as genuine politicians, academics, lawyers and other industry observers come on board the crazy train we are becoming worthy of debate. Although if we keep kicking their asses where fact destroys spin then I don’t know what they will do next.


  4. Ray Borradale says:

    I’m sure there is a mathematical solution to this conundrum. It seems the longer someone has been advocating for franchisees the longer it takes to become an acquired taste.


  5. Carol Cross says:

    You know, Ray, that you and Les are sometimes too deep for me to fully comprehend. I understand the franchise model of doing business as inviting and enabling exploitation and abuse! Any time, the independent contractor can remove the independence of the other independent contractor through contract, and control the assets to produce gross sales upon which he ALWAYS earns profits even if the other independent contractor NEVER makes a dime in profits and eventually fails has to be an unsafe deal/investment for the franchisee. As Les points out, at any time in the term of the contract, the franchisor can change the game. How can franchising be a safe investment? It can’t be! No Mom and Pop should ever put their home and/or their retirement savings at risk to buy a franchise, should they?

    My primary beef is that the RISK is hidden in the sales process and under cover of dishonest and ineffective regulation of the sale of franchises. If the risk, as indicated by historical unit performance is disclosed, and prospective buyers want to assume this risk, this is free enterprise! But! when the Congress, the Executive and the Courts cooperate to hide the inherent risk of buying a business format franchise from new buyers, this is something that we shouldn’t be proud of!!

    If franchisors and bankers and private investment entities can make money on the cash flow of unsustainable small businesses because the assets of the failed franchisees can be churned to continue cash flow, isn’t there ultimately a price to be paid by others, as well as the founding franchisees? I’m sure that some of these franchise securitizations were saved by TARP to protect the “institutional” investors in the bonds who DO have a fiduciary duty to those for whom they invest. If the Teachers’ Retirement Funds and Police and Fire Pensions are put at risk because the risk is hidden from the franchisees who form the base of the pyramid and to whom the franchisors have NO fiduciary duty, aren’t the rating agencies being misled when they look at the pyramid, the franchise system, but not the unit performance of the system? Aren’t the investors being put at risk because of the lack of transparency and inaccurate credit ratings of franchise systems?

    Franchising isn’t going away in my lifetime –my time ia short! — but franchising could change for the better if the disclosure of RISK produced competition between franchisors of the same concepts to recruit franchisees who would operate sustainable small businesses. Franchising could change for the better if only the assets of the business were posted as collateral and security for loans that would be made by the franchisors to the franchisees after the franchisors borrowed money from the banks or angels based on their proven business plans. (tongue in cheek)


  6. Ray Borradale says:

    I have a tremendous belief in the concept of franchising and while those who stand behind the government sponsored bullsiht that sucks people in deny there is a problem I truly believe that while the contract and the operations manual are integral to franchising, humans will always abuse those powers unless there are rigid rules with real penalty.

    The fraud that occurs is often/typically criminal and the consequences of the worst of franchising are so bloody shocking and devastating only those who have been there are truly experts in franchising.

    The nice sane people need to think about what would happen to those around them if their circumstances led them into having their spouse, their children and their grandchildren’s future cut in half, totally destroyed or worse.

    Has the regulator or the franchise lobbyist ever had his 60 year old wife cleaning other people’s floors and freakin toilets? Which politicians want to throw up at the thought of penniless Christmas or birthdays with family? Have any worked a lifetime to not be able to afford an operation to give a grandchild hearing?

    This crap is far from unusual.

    If society is determined to use a competition excuse to agree to destroying lives and feeding gluttonous, well represented franchisors than I just don’t have any time for the politically correct, well mannered, softly spoken approach to counter the shameful performances of governments.

    It is too bloody easy for the franchising theorists and the regulator bureaucrats to sit in their comfort and push aside thoughts of families destroyed as if they are changing channels when starving third world children, the sickening affects of cancerous cigarettes or oil soaked dying creatures come on screen. Why do so may ‘experts’, politicians and franchisees do nothing when it is within their capacity to make a difference? Grubs!

    Carol I’m still working toward ‘deep’ but I am convinced I have mastered shallow. For those who believe that the centre of the universe lies in some conceited, dirty, distorted concept of franchising as excusable free market competitive business go home and look at your children’s children. The chances are extremely good that at least one will be interfered with by franchising. And then they can all kiss my …


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