My best work has always started around a single franchisee’s kitchen table.

A few franchisees with concern ask me to meet them at their home.

The problem-solving starts almost immediately.

Les Stewart

Midhurst, ON

705 737-4635

les.j.stewart-AT-gmail.com

Is it fair to force franchisees to prove that their franchisor has acted in “bad faith”?

No. Since 1971, there have been recommendations in Ontario that franchisors should have the burden of proof when challenged about acting unfairly.

The first one was by a retired Superior Court Justice and the next one a former partner to the actual Arthur Wishart, a lawyer from Sault Ste. Marie.

1. The Grange Report

Legislative approach

(iii.) Contractual v. equitable approach

3. In these dealings also, placing the burden upon the franchisor to prove,

(a) that the contract is fair; and

(b) that the franchisor’s exercise of his rights under the contract is justified in the circumstances.

Report of The Minister’s Committee on Franchising, The Honourable Arthur Wishart, W.C., M.P.P., Minister of Financial and Consumer Affairs by S. G. M. Grange, Q.C., June 1, 1971.

2. Public Hearing testimony

I think it’s interesting that in that circumstance the Grange report does a reverse of onus. It says there has to be fair dealing, and if there isn’t fair dealing, then it’s up to the franchisor to show, and I quote, “that the contract between the parties was fair.” In other words, the onus shifts, not from the franchisee to prove they were treated unfairly but to the franchisor to prove that franchisor dealt with this individual fairly. I think that’s an extremely important concept. It goes on to say that the franchisor’s conduct was “equitable in the circumstance.” So you have this onus on the franchisor, at that point, to prove they dealt with this person fairly.

Mr. Gerald Nori, Wishart and Partners, March 7, 2000.

One of the greatest barriers is franchisee access to information.

How frequently does Tim Hortons terminate their franchised stores in the United States?

Termination of a franchise agreement is the most financially devastating action a franchisor can take.

It is the “weapon of mass destruction” for mom-and-pop franchisee life savings and employment

 

Responsible franchisors avoid this too because it is such a red flag to the investment community.

It is only fair to compare it to their peer group and to best practices.

ie. Tim Hortons terminated their U.S. franchisees 22.9, 1.1, 2.1, and 9.4 times more frequently than McDonald’s had done in the same year (2010 to 2013).

The frequency that the franchisor chooses to terminate a franchisee is a material fact to any buying or renewing franchisee.

Source: Information from Franchise Disclosure Documents (see for example Wisconsin Department of Financial Institutions). Free download for U.S. filed documents. One of 4 online sources.

Canadian information is unavailable because no provincial law requires these CDN documents to be (1) publicly filed or (2) put online.

Alberta, Ontario, New Brunswick, Prince Edward Island, Manitoba and soon-to-be British Columbia

Posted also on ConcernedTimHortonsFranchisees.ca.

The second-order, knock-on economic effects of franchisor insolvencies are very profound.

Target and Tim Hortons franchisees, staff, and equity are invisible to CDN insolvency law.

Click here for a no charge SSRN download of the Ansett case mentioned in the video: The Domino Effect: How Ansett Airlines’ failure impacted on Traveland franchisees. Dr. Jenny Buchan, University of New South Wales broke this discussion open in 2006. This is the CPA study she mentions in the video: download at no charge at WikiFranchise.org.

Chapter 6 of her book that franchisees (v. franchisors) are handicapped in defending themselves by the following asymmetrical sources of vulnerability: information, adviser, education and regulator, risk and reward, resource, contract, and regulatory.

Click here for a full Table of Contents of Dr. Buchan’s book, Franchisees as Consumers.

Will the ON and CDN governments choose (or be forced) to make “informed informed policy to respond to some very real issues” (start at 8:25)?

Which smart Tim Hortons franchisees will choose to prosper under the new 3G Capital regime?

Unlike TDL, franchising has accurately been known as a Trap for the Trusting.

 

With the proper use of research, information sharing, technology, and consulting, even a few operators can act to defend and even help themselves in a new regime.

But they need training and ultra-high levels of confidentiality.

• A few, smart, willing-to-learn and -adapt operators will survive, grow, and prosper.

Others will choose to live in the past.

Originally posted on LesStewartConsulting.ca, ConcernedTimHortonsFranchisees.ca and Canadian Alliance of Franchise Operators website (CDNafo.ca).

An essay and laws about the Stupid

The Basic Laws of Human Stupidity, Professor Carlo M. Cipolla 1922 – 2000

1. Always and inevitably, everyone underestimates the number of stupid individuals in circulation.
2. The probability that a certain person be stupid is independent of any other characteristic of that person.
3. A stupid person is a person who causes losses to another person or to a group of persons, while himself deriving no gain and even possibly incurring losses.
4. Non-stupid people always underestimate the damaging power of stupid individuals. In particular, non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake.
5. A stupid person is the most dangerous type of person.

The power of stupidity

It is not difficult to understand how social, political and institutional power enhances the damaging potential of a stupid person. But one still has to explain and understand what essentially it is that makes a stupid person dangerous to other people – in other words what constitutes the power of stupidity.

Essentially stupid people are dangerous and damaging because reasonable people find it difficult to imagine and understand unreasonable behaviour…

With a stupid person all this is absolutely impossible as explained by the Third Basic Law. A stupid creature will harass you for no reason, for no advantage, without any plan or scheme and at the most improbable times and places. You have no rational way of telling if and when and how and why the stupid creature attacks. When confronted with a stupid individual you are completely at his mercy. Because the stupid person’s actions do not conform to the rules of rationality, it follows that:

a) one is generally caught by surprise by the attack; b) even when one becomes aware of the attack, one cannot organize a rational defense, because the attack itself lacks any rational structure.

The fact that the activity and movements of a stupid creature are absolutely erratic and irrational not only makes defense problematic but it also makes any counter-attack extremely difficult – like trying to shoot at an object which is capable of the most improbable and unimaginable movements. This is what both Dickens and Schiller had in mind when the former stated that “with stupidity and sound digestion man may front much” and the latter wrote that “against stupidity the very Gods fight in vain.”

For more explanation see here.

The logic of business is coercion, monopoly, and the destruction of the weak, not ‘choice’ or universal affluence.

The leaders of the backlash may talk Christ, but they walk corporate.

Quotes:

Corruption is uniquely reprehensible in a democracy because it violates the system’s first principle, which we all learned back in the sunshiny days of elementary school: that the government exist to serve the public, not particular companies or individuals or even elected officials.

While earlier forms of conservatism emphasized fiscal sobriety, the backlash mobilizes voters with explosive social issues…which is then married to pro-business economics.

Grandstanding leaders never deliver, their fury mounts and mounts, and nevertheless they turn out every two years to return their right-wing heroes to office for a second, a third, a twentieth try. The trick never ages; the illusion never wears off. Vote to stop abortion; receive a rollback in capital gains taxes. Vote to make our country strong again; receive deindustrialization. Vote to screw those politically correct college professors; receive electricity deregulation. Vote to get government off our backs; receive conglomeration and monopoly everywhere from media to meatpacking. Vote to stand tall against terrorists; receive Social Security privatization. Vote to strike a blow against elitism; receive a social order in which wealth is more concentrated then ever before in our lifetimes, in which workers have been stripped of power and CEOs are rewarded in a manner beyond imagining.

— Thomas Frank 1965-