How many of the 25,000 Syrian refugees will become cannon fodder to the franchise industry via government guaranteed liar loans?

December 29, 2015

Several thousand, I’d imagine.

20151229 Syria cannon fodder1

How? The moral hazard-riddled, Canada Small Business Financing Program.





Is a Coffee Culture franchise profitable?

October 15, 2012

This is what someone searched for today on

Have they ever been profitable?


Except for the shills and house negroes?

my, my, my

Opportunity Knocks and Liars’ Loans: required reading to understand modern franchising

September 1, 2012

John Lorinc wrote the book on franchising from a franchisee’s investor viewpoint.

I’m glad to see it is still available to buy online and is in many Canadian libraries.

The hidden banking side is revealed in Chapter 4, The 90% Solution: Franchise Economics, some of which I excerpted in a post.

What did the business press have to say about Lorinc’s work?:

  1. National PostOpportunity Knocks: The Truth about Canada’s Franchise Industry, is an impressively researched look at the myriad of franchises that mushroomed across the country in the past decade. An award-winning magazine journalist, Lorinc has produced an engaging account that charts both the spectacular successes of some franchisers and the utter failure of some franchisees. How franchises seduce those with the most to lose, Jennifer Lanthier, November 2, 1997
  2. Globe and Mail: At its worst, Lorinc says, franchising is a haven for the unscrupulous who prey on the unwary – typically recent immigrants willing to labour long hours in dreary businesses, unaware that those operations have little chance of prospering – using them as pawns in a shadowy real estate game. Rather than reflecting an insatiable consumer demand, he inquires acidly, is it possible that all those new doughnut shops may reflect a quiet understanding between landlords and franchisors that the best way to fill fallow commercial property is to sell franchises to credulous investors? Franchise book of interest to anyone who pays taxes, Ann Finlayson, November 1, 1997

Finlayson strikes a cautionary note, specifically about the hinted at misuse of the Canada Small Business Financing programCSBFP:

Does all this matter to you? Yes, it does. In 1993, in the wake of vigorous complaints by small-business owners that Canadian banks were reluctant to finance them, Ottawa raised the ceiling on loans guaranteed by the Small Business Loans Administration to $250,000 and its guarantee rate from 85 per cent to 90 per cent, sparking a bank lending rush to franchisees and shifting the risk of franchise investments onto taxpayers’ (your) shoulders.

The Risk: Only a fraction of the Liars’ Loans are ever claimed by the banks, thereby grossly understating Industry Canada’s default statistics (Franchised v. Non-Franchised loan performance). The franchisee thinks he signed a government-backed loan but it never gets registered as such. As their bankruptcy, loss of life savings, marital and family breakdown escalate over the life of their 12 to 18 month franchise career, the franchisee NEVER looks to Box 9 of the CSBFP loan application form (Projected Sales ) as the source of their trouble; where the lie is put into the “Liars’ Loan”. The proceeds of these engineered-to-fail loans is split upfront by the franchise banker with the bank, banker, franchisor and sales agent. If questioned, the bank shreds the paperwork and waits for the lawsuit.

And, seriously, how many of these Immigrants as prey losers could or would ever sue a Schedule 1 chartered bank?

The Return: Smashing quarterly earnings goals, record profits, high turnover in the small business division of each of the banks, and making franchise lending the most lucrative form of commercial lending in Canada. Private gain/public loss enabled by a criminogenic environment, moral hazard, regulatory capture…

Lorinc carefully mentions the “windfall profits” in this arrangement of churning:

What’s more, some banks and franchisors have put the SBLA program [predecessor government guaranteed loan program] to questionable use during foreclosure actions against franchisees, says one former owner who has been through the process. When a bank calls a loan against a non-performing franchisee, the 90% guarantee effectively relieves the bank’s receiver from trying to get the best possible value while disposing of the owner’s assets. With most of the loan covered by the Canadian taxpayer, the assets – fixtures, kitchen equipment, inventory, etc. – can be sold quickly at a deep discount, possibly below market value. This allows the franchisor too step in and buy back the property at better-than-firesale prices, thus generating windfall profit when the store is later re-sold to another franchisee.

An important work that, depressingly, is as relevant in 2012 as it was in 1995.


Disclosure: My lol pecuniary interest here and here.

Franchisee emancipation: It’s a matter of when and who has control of it, not if

July 2, 2012

Millions $ are wasted in franchising because of franchisees’ passive resistance to even very good, mutually profitable franchisor-led inititiatives.

If franchisees perceive themselves to be indentured into a form of slavery, Who is their Lincoln?

What then did you expect when you unbound the gag that muted those black mouths? That they would chant your praises? Did you think that when those heads that our fathers had forcibly bowed down to the ground were raised again, you would find adoration in their eyes?

Jean-Paul Sartre 1905 – 1980

I work from home too

April 26, 2011

I am quite effective doing it for a wide range of clients.

Inground sprinklers. Landscaping lighting. Business consulting. Email Indexing Service (wiki). Speaking. Marketing. Sales. Projects.

Any landscape projects planned this season in the GTA or central ON?

Midhurst, ON 705-737-4635 begin_of_the_skype_highlighting            705-737-4635      end_of_the_skype_highlighting Tel

I’m going to take some time off.

Cheers, Les


Are franchise bankers running a peep-show, a clip joint?

January 31, 2011

Franchising is low-grade entrepreneurial pornography.

Read Franchising Opportunism and you judge. The horrendous losses on unregistered guaranteed government loans are self-financed on inflated appraisals.

A clip joint or fleshpot is an establishment, usually a strip club or entertainment bar, typically one claiming to offer adult entertainment or bottle service, in which customers are tricked into paying money and receive poor goods or services, or none, in return.

Typically, clip joints suggest the possibility of sex, charge excessively high prices for watered-down drinks, and then eject customers when they become unwilling or unable to spend more money. The product or service may be illicit, offering the victim no recourse through official or legal channels. Wikipedia

The process by which banks create money is so simple that the mind is repelled. John Kenneth Galbraith

See Canada Small Business Financing Program and U.S. SBA 7a Loans [and UK and France and…]

Franchising offers a low-grade life experience

January 30, 2011

Ultra-white teeth, shiny suits and orange skin.


Modern slavery is economic debt

July 21, 2010

Last week, I was in a boat on Kempenfelt Bay, Lake Simcoe. I’ve lived for over 35 years in Simcoe County. My two children were born in London, Ontario.

Thanks to The Educated Imagination for reminding me on July 9th about Lord Simcoe and his role in abolishing slavery in North America.

Lieutenant-Governor John Graves Simcoe of Upper Canada, anti-slavery advocate

On this date in 1793, the Act Against Slavery was passed in Upper Canada (present day Ontario), also prohibiting the importation of slaves into Lower Canada (present day Quebec).  This was a full fourteen years before the British Empire outlawed the slave trade, forty years before it outlawed slavery altogether, and sixty-nine years before Lincoln’s Emancipation Proclamation.

Not a Canadian thing to do, perhaps until 1867, but in the spirit.

Will a bank forgive a franchisee/employee his debt?

June 14, 2010

An interesting question.

You can either ask this:

  1. after you change from a franchisee to an employee (individually) or
  2. ask as a franchisee (together in a group).

Either way, the franchisor has the unilateral, 100% right to change anything, anytime they want to.

Unless you stick together.

I see debt people

June 13, 2010

What happens when a struggling/new/ambitious franchise executive/majority shareholder says to their franchisees:

“Boys, we decided you’re employees, not franchisees.

The bad news is that you’re all terminated as franchisees in 91 days.

The good news is that we’ve decided to let you re-apply for your route jobs.”

What exactly happens to those franchisees who are up to their eye balls  in debt?

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