die Weiße Rose: Five little kids, in the mouth of the wolf

April 29, 2009

whiterose

POPE SPEAKS AFTER BEATIFICATION MASS FOR GERMAN CARDINALThe White Rose (German: die Weiße Rose) was:

a non-violent resistance group in Nazi Germany, consisting of a number of students from the University of Munich and their philosophy professor. The group became known for an anonymous leaflet campaign, lasting from June 1942 until February 1943, that called for active opposition to German dictator Adolf Hitler’s regime.

The six core members of the group were arrested by the Gestapo, convicted and executed by beheading in 1943. The text of their sixth leaflet was smuggled out of Germany through Scandinavia to the United Kingdom, and in July 1943, copies of it were dropped over Germany by Allied planes.

Today, the members of the White Rose are honored in Germany as some of its greatest heroes because they opposed the Third Reich in the face of almost certain death.

Sophia Magdalena Scholl was a  member of White Rose. She (middle) was executed with her brother Hans (left) on February 18, 1943. A custodian named Jakob Schmid informed the Gestapo.

Sophia Quotes:

The real damage is done by those millions who want to “survive.” The honest men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes.

I’ve been thinking of a story from the Old Testament: Moses stood all day and all night with outstretched arms, praying to God for victory. And whenever he let down his arms, the enemy prevailed over the children of Israel. Are there still people today who never weary of directing all their thinking and all their energy, single-heartedly, to one cause?

Hans  had been inspired by a August 3, 1941 sermon of Bishop August Clemens von Galen, SJ. Hans is said to have stated: “At last somebody has had the courage to speak out.”

Source: The Nazi Doctors: Medical Killing and the Psychology of Genocide, Robert Jay Lifton, p 39-40

Somebody, after all, had to make a start. What we wrote and said is also believed by many others. They just don’t dare express themselves as we did.

The Holocaust Research Project


U.K. franchisor leaders record a new ethical Low: Hard-selling to the recently Unemployed

January 26, 2009

the_bfaTalk about stealing a guy’s life savings when he’s down.

And when I thought I had heard it all and that franchise hustlers would do anything for a sale.

Now word out of Liverpool that their franchisor-only trade association, British Franchise Association, BFA is hard-selling directly to recently laid off UK workers, via their former employers.

It’s like a scene out of the movie, GlenGarry Glen Ross, totally hardcore, old-school boiler room ABCs (always be closing):

We’re adding a little something to this month’s sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize? [Holds up prize] Second prize is a set of steak knives. Third prize is you’re fired.

Lie. Cheat. Steal. All In A Day’s Work. Source

It reminds me of the ambulance-chasing personal injury lawyers forcing their business cards into the hands of people lying in the street from a car accident.

Obviously, what I (or the British public) consider to be ethical business behaviour may not be what the BFA brain trust considers to be fair game. The 2 characteristics of an ideal franchisee are: Did their cheque clear and Can they fog a mirror (alive)?

The story (Franchising could be your next career move) is a little awkwardly worded but these are the most flagrant lies that support this propaganda piece:

  1. franchising is a lower risk than non-franchised businesses (proven to be false),
  2. a BFA franchisor is less risk than someone who is not a member (not proven),
  3. the BFA is a benevolent society doing a public service (they serve their members’ interests),
  4. franchisees fail only because of their sloth or stupidity (fraudulent systems?) and
  5. the BFA represents both franchisors and franchisees (only franchisors).

All of these assumptions are false and dangerous. The BFA executives are either incompetent or knowingly perpetuating a cruel fraud, this time on the newly laid-off Brits.

  • You will be preyed upon when you are at your weakest time in your life.
  • Unemployment is an excellent time to buy into a phantom dream (In business for yourself, not by yourself; Be your own Boss) because you want so much to believe it (mortgage, kids, debt, etc.) you are temporarily a very shitty decision maker.

I know. I signed my franchise agreement two weeks before my unemployment benefits were to run out in 1992. BTW: an Ontario Justice said in 2000 that I had done the best due diligence she had ever seen but still lost $140,000 in 4 years, being sued, bankruptcy.

Another veteran but anonymous observer, Lionel Hutz PA, picked up the story and wrote about it on Blue MauMau under the following banner, BFA Wants Unemployed to Buy a Franchise. Lionel leads in with:

The British Franchise Association, the counterpart to America’s International Franchise Association, is directly approaching companies that are laying off employees, to persuade those newly unemployed to buy a franchise from one of their franchisor members.

Lionel goes onto say and pose a most relevant question:

Note the false claims that franchised businesses have higher success rates, and the assertion that British Franchise Association members must “meet the strict ethical and business criteria.” I wonder if the BFA has ever expelled a franchisor for bad franchising conduct?

Ray Borradale, a very effective Australian franchisee advocate and mouthpiece chips in with:

AFA, BFA, IFA and FCA read from the same book.  This is symptomatic of franchisors; good and bad – and it is dangerous.  I note the reference; “educate people about the many benefits of buying into a franchise” with contempt.  Where is the education about risk and due diligence?  This unbalanced marketing of franchising is not new and BMM has covered many similar stories. It is misleading and deceptive but it appears to be accepted by authorities in every country. [I would add the CFA to Ray’s list of talking heads.]

Remember: Franchising is practiced identically around the world. Some countries know about the dark side of franchising and have developed national spokespeople to combat the propaganda. Some countries (like the U.K.) do not know.

IN CONTRAST, note the level of discernment found in this Australian headline of January 26th (care of Franchise-Chat.com), The Franchising Trap:

The Australian dream of becoming self-employed can be the path to financial security, but it can also go disastrously wrong.

For years franchising has been viewed as a reliable, somewhat less-risky option for small investors looking to start their own business. But the 500-plus complaints received by the Australian Competition and Consumer Commission every year arising from disputed between franchisees and franchisors show that franchising is often not the easy entry to business that some people think.

In the U.K. there is a greater danger than is faced by franchise investors in Australia.  Aus does not have a small business government guaranteed program, but the U.K. does.

  • A guaranteed loan program can be misused to fuel franchise fraud. I wrote about it in Canada, I know that that it is happening in the U.S. and also in the U.K.’s aptly named Small Firms Loan Guarantee Scheme.

Heads up to these other countries that have a similar loan guarantee program for small business (Canada CSBFA, U.S. SBA 7(a), and U.K. SFLG):

  1. Korea,
  2. Japan,
  3. European Union (Netherlands, Denmark, Belgium, France & Germany),
  4. Indonesia,
  5. Malaysia,
  6. Nepal,
  7. Philippines and
  8. Taiwan.

Every country gets the type of journalism that it is willing to accept from it’s traditional media outlets. This type of breathless and mindless regurgitating of franchising propaganda is almost never seen in the U.S., Australia or Canada anymore. It was pushed out by volunteer franchisees getting on the back of its nation’s business editors.

  • These blatant lies will continue as long as they are not shot down by a small group of knowledgeable, experienced and vigorous group of Web 2.0 U.K. warriors.

Their basic training can begin once they choose to speak out.


Lawyers are Rats: A top legal scholar exposes the corruption of his profession

January 14, 2009

Maclean’s which started in 1905, is Canada’s first weekly newsmagazine.

In an August 2007 interview, journalist Kate Fillion interviews Philip Stayton, write, former corporate lawyer and dean of the law faculty at my alma mater (The University of Western Ontario).

Interview with Philip Slayton

Ex-Bay street lawyer talks about how lawyers became greedy, unprincipled enablers of the rich

Question/Answer [my emphasis]

It’s hard to imagine a book titled Lawyers Gone Bad: Money, Sex and Madness in Canada’s Legal Profession (Penguin) is going to be popular with your colleagues. Why did you write it?
I know lawyers are going to say, “Come on, he’s talking about 15 or 20 members of a profession that has 90,000.” But in telling these stories I’m trying to extract general ideas: the amoral nature of legal practice, the gross deficiencies of the regulation of lawyers, the sense of misery that pervades the legal profession.

Do you think most of the lawyers you write about started off bad, or did the practice of law change them?
Why do people end up doing things they shouldn’t do? Their upbringing, their background? The point is, I don’t think there’s anything in the legal profession now that restrains people’s bad impulses, I don’t think there’s a generally accepted code of conduct or a vibrant disciplinary system.

This isn’t just a Canadian problem, either. On my desk I have an editorial from a South African magazine which begins, “Let’s face it, our legal system has effectively collapsed …  One of the more obvious reasons is the culture of greed, pride and self-indulgent arrogance that pervades the legal profession.” Then there’s this gem from the South China Morning Post about a client who asked for a breakdown of his legal bill, which included a charge for “recognizing you in the street, crossing a busy road to talk to you to discuss your affairs, and recrossing the road after discovering it was not you.”

As you point out, in 2004 only 44 per cent of Canadians said they trusted lawyers, whereas two years earlier, 54 per cent said they did. Why do people dislike lawyers so much?
Lawyers are seen as greedy, and in good measure I think that’s a justifiable criticism, and also unprincipled. Thirdly, and this is perhaps the most important point of all, the average person has no real access to lawyers, to the legal system, to justice. It’s all right if you’re very poor and have the kind of problem that legal aid will help with, but most Canadians have middle-class incomes and simply can’t afford to hire a lawyer. The chief justice has spoken out about this, but very little is being done to rectify it. It’s fundamentally undemocratic. It’s as if somebody tried to pass a law that said you can’t vote in a federal election unless you have an income of $100,000 or more. Well, there would be a revolution.

How has the legal profession changed in Canada over the past few decades?
In very general terms, it has become a business: interested in profit, not interested in making judgments, not interested in providing access to poor people or even middle-income people. The old ideas — that lawyers have something to do with justice and fairness, and are part of an important system that provides a stable, safe, law-abiding society — have, to the extent that you can generalize, been lost by members of the legal profession.

You taught law for 13 years, both at McGill and the University of Western Ontario, where you were the dean of law. Is there something about legal training that nudges lawyers toward amorality?
Yes, I think so. Law students are taught and lawyers subsequently believe that it is not their job to pass judgment on their clients as people, or to pass judgment on what their clients want to do. Lawyers are enablers. They are there to try to do what their client wants, and are in many cases paid handsomely for it. The whole question of the values behind the rules of the legal system is not on the whole of great interest to law schools or the legal profession. And there’s an additional point: lawyers are taught to manipulate the rules in favour of their clients. If you’re a manipulator of rules, then you can’t respect the rules as such or believe that they incorporate important values.

What kind of ethical dilemmas does the average lawyer face?
The average lawyer in a big firm practice faces the requirement to put aside whatever kit bag of values, principles and ethics he may personally subscribe to and concentrate on making it possible for clients to do what they want to do. No client comes into a lawyer’s office and wants to have a discussion about whether it’s a good thing or socially desirable to do this, that, or the other. And they’ll seek another lawyer if you try to have that discussion.

There’s a big incentive for lawyers to pad their bills, isn’t there?
Yes, and it’s common practice. It’s easy to round up. It’s easy to reflect on what you’ve done during the day and say you’ve worked for seven hours rather than six.


Why are lawyers so miserable?
If you practise law you’re plunged into what is by its nature a highly competitive, highly stressful environment that sucks up most of your time at the expense of things that most people think go a long way toward making life worth living, such as spending time with family, or reading a book.

The same could be said of many jobs, like banking or even journalism.
No doubt. But I think there’s more to it for lawyers than simply stress. If you’re a doctor, you may have a hell of a day, but at least you can be comforted by the idea that in some small way you improved the general state of society. I don’t think you can believe that if you’re a lawyer. I hasten to add that legal practice is very diverse, and there are lots of different kinds of people practising law, and this is not true of all of them. But it’s true of a lot of them. You come home at the end of the day and say, “Why did I bother doing that? What I’ve really done is make rich people a little bit richer, maybe, and as a result of that I can send them a big bill.” This is not a good way to spend your life. After you get over the initial drama of this high-stakes environment, you’re left with the feeling that this is a pointless occupation and you should find something more worthwhile to do.

Why did most of your students go into law?
A lot of people don’t like lawyers and would be horrified if their child came home and said, “I want to be a lawyer.” But it is a profession, and one with the potential of generating a significant income. It gives its members a certain power, the power of knowing something that other people don’t know [credence good provider]. And there is a kind of glamour associated with it. Look at all the television programs that deal with the law — people are fascinated with this process, even though they’re deeply suspicious of lawyers. And I think in many cases, certainly this was true in my case, people went into law because they couldn’t think of anything else to do.

Is there something else you should have done?
Oh yes, but I’m not going to tell you. I find myself increasingly in the role of critic of the legal profession, but I’ve spent my life as a lawyer. I went to law school in 1966, I’ve been in the legal profession one way or another for 41 years, it gives me no pleasure at the end of all that to look back and say, “Oh God, this was not a good way to spend my time.”

Is this book your penance?
[laughs] No. Do I think it will lead to some kind of significant reform of the legal profession? Of course not. It’s beyond any one person’s ability to do that. Do I think some kind of significant rethinking of the profession is in order? You bet I do.

So many of the lawyers you write about wound up stealing from their clients or bilking their firms. But greed wasn’t always the motive, was it?
No. I first got interested in this whole subject in 1989 or 1990, when I was a junior partner [at Blake, Cassels & Graydon]. The most prominent partner, Bob Donaldson, a nationally if not internationally respected lawyer making lots of money, was suddenly found to have had his hand in the till. That was a startling fact in itself, but here’s the thing that puzzled me most of all: the amounts of money involved were relatively minor. It wasn’t as if millions and millions had disappeared, it was more on the order of using money improperly to buy airline tickets to go to Bermuda for the weekend, penny-ante stuff by his standards. Why would somebody risk everything — reputation, friendship, professional status, even potentially freedom — for that? It certainly wasn’t greed. And in nearly every case I write about, the lawyers didn’t do it, for the most part, for money.

Well, is it self-destructiveness or is it arrogance?
Arrogance is part of it. If you’re taught how to manipulate rules, you lose respect for them, and that leads to a kind of arrogance: I’m bigger than the rules, I’m not the average man on the street who needs to be law-abiding because I know how to get around the rules. And there may be just a touch of the more common form of arrogance, too, which is “I’m smarter than they are, they’ll never catch me.” But you can be arrogant and still have a healthy sense of what’s good for you, and what dangers you shouldn’t run. I have some speculation about why people behave this way, and one reason is simple boredom. When people are bored, there’s a tendency to take risks.

What happens to lawyers who steal? How is the profession regulated?
The disciplinary process of the law societies in this country is deeply flawed. Lawyers are disciplined for breaches of professional rules, but it’s like so much in Canada: everything depends on where you live. What can get you disbarred in Alberta won’t have much effect on you at all in, say, Nova Scotia. The first difficulty with the disciplinary system is that if you’re a lawyer who’s alleged to have stepped afoul of the rules, you’re investigated by the law society. If they decide you’re a transgressor, they’ll prosecute you, they’ll hire a lawyer to do that, and the disciplinary committee itself is the law society. So you have the investigator, the prosecutor and the judge all essentially representing the same institution. I thought in this country we had a fundamental principle, that the person who investigates and prosecutes isn’t the same person who judges.

Is yours a widely held opinion?
I haven’t heard people rising up to complain about this. In the United States, by the way, disciplinary matters in just about every state are heard by courts, not by panels of the bar association, which is how it should be. I think Canada really has to get its act together. Look at the reforms in the U.K., which woke up some years ago to this problem and [adopted] quite sweeping reforms that largely removed self-regulation from the legal profession. Why in heaven the same sort of reforms are not under consideration in this country I do not know, except that self-regulation is regarded with quasi-religious fervour.

You talked to quite a few lawyers who’ve been caught doing something wrong. How many of them actually expressed remorse?
On the whole, there was not a whole lot of remorse expressed. I don’t think these were penitent people who were terribly ashamed of doing a bad thing. Take the case of Martin Wirick, the B.C. lawyer who was involved in a massive real estate fraud, I think it’s the single biggest legal fraud that Canada has ever experienced. It wasn’t as if he was stockpiling money to run off to South America. The most he ever got out of it was payment of very ordinary legal bills, and in fact I don’t think the client ever even fully paid them. So he didn’t do it for money. When I talked to him, he said things like, “Oh, I was just so tired, I just didn’t give a shit, I was unhappy, I hadn’t had a vacation in years.” What he did not say was, “When I think back on what I did, I’m so sorry about it, I’m so sorry about people who lost money as a result of my activities.” I think he was hapless, a bit of a schlemiel, and his client was a charismatic, glamourous person.

Is it common for lawyers to become enamoured of their clients?
Oh yes, very much so. I think lawyers can have a hero worship of their clients. Think of the whole Conrad Black trial, that poor Mark Kipnis who will probably go to jail because he did what the boss told him to do. It’s [a case of] the dull old lawyer with the charismatic client who says “Do this, do that,” and does the lawyer say, “Just a minute sir, this is not right”? No, of course not, because dull people can easily fall under the sway of charismatic people. I think quite a lot of that happens in the legal profession, though I have to emphasize that there’s a lot of difference between [a big firm] at Bay and King in Toronto and the single practitioner in Goderich. If you have an important client, a Conrad Black or somebody like that, who says he wants to do something but you refuse, he’ll just say, “Fine, I’m sure the law firm across the street will do it.” If your important client, who is also a big source of revenue for your firm, walks out the door, well, it’s not going to be good for your career. It takes a very strong and principled person to do that, particularly when you consider that the law is very complicated, and it’s not always absolutely clear what’s right, what’s wrong, what can and cannot be done. That makes it easier to say, “Well, let’s try it out and see what happens.”

Who stands out in your mind as being the worst of the bad lawyers you wrote about? I’m guessing you’re going to say Ingrid Chen, the Winnipeg lawyer.
There’s no doubt that she behaved abominably. She’s now in prison, because it was established that she hired enforcers to beat up clients who upset her, along with a whole variety of other things. But the behaviour was so bizarre, so manifestly self-destructive and likely to lead to catastrophe, that you can’t just say she’s a bad person who got what’s coming to her. It’s more that she has some deep problems that need to be sorted out. An interesting case is Michael Bomek, a criminal lawyer based in Flin Flon, Man. with a largely Aboriginal clientele, who was thought to be a creative and gutsy lawyer who fought against an RCMP detachment that was thought to be racist, and indeed there was subsequently a government commission that found it was racist. He was a notable figure and something of a hero, almost. And then it turned out that he had been having sexual relations with some of his male Aboriginal clients. The RCMP accused him of sexual assault and indeed he pled guilty, went to prison and was disbarred, though for other reasons. I went to Flin Flon and to the reserve and I wound up feeling sorry for him, I found him quite an engaging character. I wrote [an article] about him but subsequently he got into all kinds of other trouble. He got out of prison and was running a hot dog stand in Prince Albert — where’s Monty Python when you need them? — but he wasn’t just selling hot dogs, he was selling marijuana. The police busted him. But then the whole thing took a sinister turn, he was charged with further sexual transgressions involving children and was convicted of some of them. You look at this guy and there’s a lot, dare I say it, to admire, certainly in his early career. But perhaps, as the Crown attorney who prosecuted him the first time around told me, he’s a psychopath. I’d be very surprised if he had the slightest little bit of penitence in him.

Why are lawyers now so instrumental in money laundering operations?
There’s recently been a whole spate of national and international rules about money laundering, trying to get rid of it because it promotes organized crime. In Canada, lawyers have resisted, successfully, application of those rules to the legal profession. To simplify, they’ve said, “You cannot oblige us to report cash transactions to a government agency” — which, by the way, banks are now obliged to do — “because to do that would be a fundamental violation of solicitor-client privilege.” Meanwhile, those who know anything about this, like the auditor general of Canada and various high officials in the RCMP, have said that partly because they’re largely exempt from these rules, lawyers can become, and some have become, agents of money laundering. You go to your lawyer with cash because he’s exempt from these rules. The law society will say, “No, no, no, we have rules about this, any cash transaction over a certain amount has to be reported to the society.” But there certainly isn’t the full oversight by federal authorities that you find in all other areas where financial transactions happen. I think invoking solicitor-client privilege is nonsense. If you’re a lawyer, and somebody walks into your office and says he’s going to buy a house and needs to put a $50,000 deposit down, and here’s a briefcase full of cash, would you not think, Hmmm, this is very unusual? It’s not some massive encroachment of solicitor-client privilege to address this issue. It’s just plain common sense.

How can the average person protect herself from being cheated by a lawyer?
Do not be overawed, and feel free to question both the advice and the bill. Before the Internet, lawyers were gatekeepers, really the only ones, to this vast store of legal knowledge. Now, anybody can go on the Internet and get any Canadian statute, regulation, or case, easily. But people don’t seem to be doing that in the same way they do it with medicine, where if you have a pain in your toe, you go on Google.

The successful implementation of the Information Sharing Project ISP, would:

  1. translate franchise legalese into investor-friendly common English terms,
  2. provide hundreds of real-life examples of common problems from newspapers, public hearings, magazines, internet, etc.,
  3. use an easy-to-use, adult-oriented self-taught search format (think: Google for franchising),
  4. allow an innocent to become a pro very quickly (flattens learning curve by harnessing network effect of the internet),
  5. demonstrate that franchising (rent) has over 200 unique business risks versus non-franchised small business (ownership),
  6. create a true, franchisee-driven Web 2.0 forum by harnessing wikinomics and the inevitability of the Free! market in franchise information,
  7. demonstrate that franchising is practiced identically around the world,
  8. bypass the franchise bar’s monopoly gatekeeping function (cases forwarded on merit not whether or not they support the industry elite’s purposes) ,
  9. allow low-cost [free maybe] worldwide education and self-diagnosis which is independent of the legal profession’s monopoly power on information,
  10. improve access to justice by lowering costs by creating a competitve expert market (supplants franchisebar/legal only with legal, expert system software and  non-legal consultancy markets),
  11. create an opportunity to aggregate resources to fund precedent-setting litigation which is currently suppressed by credence good monopolists who cheat,
  12. separate diagnosis from treatment within the repair cycle (proven to minimize credence good opportunism problems), and
  13. move to solve the lawyer:client opportunism and the don’t-switch-horses-in-the-middle-of-the-race (sunk costs) dilemmas.

Paper-based, 19C linear technology (the law) being electrocuted by hundreds of dissident franchisee blogs, each with an ISP icon that instantly makes the [current economic rents (payments over what is justified: gouging) of a jealously guarded monopoly on information], drop instantly to next-to-zero.

If my analysis is correct, the appropriate regulatory and administrative law response would be to acknowledge and receive an individual citizen’s opinion, but if inaction in the face of demonstrative wrongdoing by “winners” in brokering industrial interests plead either:

  1. resource poverty or
  2. legislative incapacity.

With the passing of the Ontario Arthur Wishart Act (Franchise Disclosure), 2000 (2) was off the table so the only option left was 1.: lack of resources. Mr. Allan MacDermid of the now ironically and historically frequently renamed Ministry of Small Business and Consumer Services played that card: love to help but our hands are tied (no $).

Funny thing is: I never asked the Ontario government for economic help, having determined that this must be a private sector solution. [free download of 2003 ISP Proposal].

BTW: Industry Canada played exactly the same game when I defined Predatory franchise lending in my 2005 paper called, Franchising Opportunism. In 2006 (I intentionally waited 365 days to followup), Mr. Peter Webber said to a consulting proposal I wrote (that he suggested I send to him) that: not enough money to fund any new audit activity.

Mr. Webber suggested that I check back in 5 years when the Canada Small Business Financing Act, CSBFA and Regulations would go up for it next statutory review.

Perspective: In 2005-06, Industry Canada loan program paid out $72.5 million in total claims and my audit service proposal was for $23,200 plus GST for this theoretically self-funded federal program.


A: I was a legal shill over at Blue MauMau

December 31, 2008

Q: Daddy, What did you do during franchising’s Great War of Words in 2008?

  • Rest of Father and Child franchise talk.

Q: Daddy, whats a shill?

A: Honey, I used my education, rhetorical skills and experience to confuse and deceive franchisee advocates in their attempts to improve themselves. I was what was a specialist : a digital apologist.

You lied for a living?

Not directly dear. I presented information on a selective basis [credence good cheater] that I knew would be misinterpreted by naive franchisees: lead them down into blind allies.

We sabotaged the building of trust between former franchisees by playing one off against the other.

So you lied by the things you didn’t say?

That’s right dear. Let’s not forget, this has more than paid for your college tuition. A few deadbeat banner ads could hardly cover any confidence game’s expenses [nut], now could they?

No Daddy, I guess they couldn’t. I love you Daddy.

I love you too.


Class System: Aware it’s a rigged Game (yes or no)?

December 29, 2008

rouletteThere are two types of people within the business format franchise industry:

  1. those that know [have awareness] that franchising is a con game that pays out like a crooked roulette wheel [pre-determined payoffs to maintain the illusion of a level game] or
  2. those that think it has primarily to do with franchisee hard work, pre-sale due diligence, etc.

The complication is that Class #1 include:

  • control next to 100% of billions of investments,
  • allies of the greatest authorities in every country and internationally (ie. the state, banks, franchise bar, etc.),
  • legions of graduates from the world’s best universities (education must mean adherence to the truth, right?),
  • the most handsome (and therefore presumed good),
  • and have all the trappings of financial success (which #2 assumes that they will be successful by association).

The few former #2 who have become traitors to Class #1 (ie. aware but not profiting from the status quo) and are stilll talking are cranky, paranoid, broke, rude and cynical.

An accurate observer, however, concludes the following: Financial failure or success in business format franchising is mostly luck.

  • But you get a chance to pull the slot machine’s arm, right? Make you feel luckier, doesn’t it?
  • It re-distributes wealth; it has long since stopped creating wealth [90% of the time this statement is 100% true; the 10% where it is false has nothing to do with skill, it has to do with luck).

There are winners but, despite the spin, they have the skill involved in picking the winning lottery ticket. Don’t tell me about the 30 year McDonald’s franchisee: they don’t make those agreements anymore.

BS Differentiating Characteristics

1. Intelligence: Notwithstanding the name-calling, those that lose at franchising are often the smartest ones in the orientation class. The ones forced to the wall often are the ones that realize the game, after they sign and try to rally the troops. Communication skills, persistence, credibility and curiosity are the a sure ticket to franchise bankruptcy.

2. Lack of Adequate Pre-sale Due Diligence: simply an excuse for industry apologists using hindsight bias to force silence via shame. Believe me I’ve met lots of “successful” franchisees who did zero due diligence. Everyone admits that DD is impotent against franchisor opportunism which is played out in 1,001 seemingly random ways.

3. Laziness: Franchisees work like hell and only usually collapse when they hit their own personal wall of mental, physical and financial limits. It takes a long time to learn this foreign language (franchise jargon).

4. Most success is within Franchisee’s means to Control: Almost all of the decision making is taken via the franchise agreement. Tough to argue both sides of an argument at the same time (ie. Franchisee is 100% responsible while franchisor has 100% control of assets). So one-sided that some franchise agreements have been declared an employee:employer relationship by U.S. state Courts and labour departments.

5. Deceit, Gag Orders, Shame, PR, Failure to Acknowledge: Why does the industry spend so much time controlling information (gag orders, use of shame, SLAPPs, 3 Wisemen on Blue MauMau, counterspin, undue legislative influence, lobbying, etc.) when they could simply commission credible academic research to prove that franchising is a legitimate business?

Their failure to fund (which they can clearly do) and hand over information to independent researchers indicates that they want to suppress [not advertise] independent, verifiable, accurate success rates. They are, in a sense, judged guilty by the actions that they choose to avoid.

  • #1 know that their dominant position is fueled by a crap shooting machine, at best.

That you have yet to join that class, speaks of your level of awareness. That’s all.

  1. Persist and continue to ask very simple questions and you will have your eyes opened. And you can teach everyone in your family, too. [Each person knows 250 people so they say and that there are only 6 degrees of separation between all of us on this planet.) OR
  2. Refuse to challenge the conventional wisdom, and continue to be cannon fodder (and descendants) for V2.0.1 of the next scam.

Your choice.


Separate the Act and the Actor

December 22, 2008

There is a tendency to get confused when you are not meeting your financial goals in franchising.

Clear thinking is particularly important when you start becoming aware the something is wrong.

I get a little upset and  a lot suspicious when I hear name-calling (ad hominem arguments) going on. When ever I hear them from experienced industry players, my ears perk up and I question their real motives for speaking.

Not only are these arguments distracting and hurtful but most of all, they interfere with accurate decision making and the very serious work of determining what went wrong (in order to avoid the same mistake in the future).

What I think people should do, if put in an old-fashioned way is to Love the sinner but hate the sin. This is a fairly useful way of falling into a very human perception trap:

  1. For every cause there is an affect (A is caused by B) and
  2. Most outcomes are within the control of the franchisee (if I work hard, I will succeed).

I can absolutely tell you that both are functionally FALSE in modern mom-and-pop franchising.

  • But it serves the elite’s purposes to scapegoat the individual while suppressing institutional memory via gag orders and other silencing techniques.

The mistake you made was to sign a franchise agreement. At that moment, you lost control of your life savings and it was only a matter of time. That you were unaware of that fact does not change it.

  • The specific life saving Death Certificate is unique; it’s your life’s story for heaven’ sake.

But for all intents and purposes, the cause of death in immaterial. Dead is dead.

The King’s Death Certificate


A Trap for the Trusting: A hopelessly romantic view of franchising

December 8, 2008

humpbackanglerfish“A Trap for the Trusting”

Harold Brown, Boston, USA-based lawyer, coined this not-famous enough phrase in describing franchising well over 40 years ago.

  • Sad to report, it’s gotten much worse. The table manners appear better but the rot goes deeper.

The reason is that there is a veneer of respectability that was missing in those raw, cowboy days. It is more treacherous being a franchisee than when Brown was alive and practicing law.

Analysis: There are two ways to win at any competition:

  • One is to raise your game [internal] and
  • Two is to to lower your opponent’s competence [external].

G.K. Chesterton put it well:

It is perfectly obvious that in any decent occupation (such as bricklaying or writing books) there are only two ways (in any special sense) of succeeding.

One is by doing very good work, the other is by cheating.

  • The franchise industry has consistently chosen to cheat.

The architects of that game is the franchise bar and, specifically, the Alpha Male franchisor lawyer [aka Tin Pot Tyrant].

  • These credence good providers cheat principally by managing the illusion that franchisees have only one route to resolving disputes [lawsuit].
  • and that they stand more than 0% chance to win in 100% of lawsuits and
  • Any, anywhere the law is fine enough to catch blatant fraud.
  • Of course, there are some temporary “wins” by franchisees but that is useful in maintaining false hope.

In nature, luring someone to their death is a well-studied strategy. It works really, really well.

Aggressive mimicry is:

…a form of mimicry where predators, parasites or parasitoids share similar signals with a harmless model, allowing them to avoid being correctly identified by their prey or host. In its broadest sense, it involves any type of exploitation,…

A “harmless model” is an experienced regional commercial lawyer. A mimicking predator is listed on the national franchisor trade association’s web site.

The Greatest Lies are Told in Silence: the deceived animal (franchisee) is unaware [before AND after] that there is a trap (although observers know full well) and is steered into believing that the Big Bad Wolf franchisor huffed and puffed their life savings away.

Many aggressive mimics use the promise of nourishment as a way of attracting prey. Though apparent to observers, the irony of falling prey when trying to capture its own is certainly lost on the deceived animal. Wikipedia

The Humpback anglerfish uses a modified dorsal spine as a bioluminescent ‘fishing rod’ to capture prey.

“My. What big teeth you have, Grandma.”


Silencing dissent via Humiliation

December 1, 2008

hismastersvoice1

When you are a franchisee, you quickly learn what is and is not allowed to be said in public.

It goes like this, you can talk publicly:

  • 1,000 hours about increasing your sales but
  • 0 hours about how to increase your profits.

Those are the basic rules (norms, standards) of every trademark system that I have known.

These cultrual values are expressed during the regional and national meetings. This is what the meetings are principally for: the reinforcement cultural values within a group via a type of public demonstration or play.

Franchisors are very attuned to attitudes of dissent. They separate franchisor-friendly behavior which is rewarded and detect of franchisor-unfriendly attitudes and behavior which is punished.

  • They teach the new franchisees what is and is not to be said and done.
  • They encourage mentorship of new franchisees from someone who is “on the team”

One of the ways of showing the master’s pleasure is through the always-present Awards Ceremony. Such juvenile awards such as “Top Franchisee” or “Best Team Player, 2008” are handed out with the obligatory publication of the “grip and grin” photos. No speeches are allowed, however, unless the franchisee is one of the “anointed few: the royal priesthood, a franchisee set apart” (ie. a franchisee who is so deeply co-operative as to be a virtual extension of the current franchisor). These are baubles bestowed upon franchisees who are “on the team” (ie. acting as a franchisor collaborator).

It was no mistake that McDonald’s Canada rewarded the southwestern Ontario franchisee who was the token franchisee on the government-lead Franchise Sector Working Team. Within a month of the law being passed (the law was pushed by franchisors, not franchisees), this four-store operator won a major award: an important symbol to the hundreds of Canadian McD operators of how to properly lick the hand.

  • This franchisee’s policy competence was such that he went out into the hall to call his master whenever a thorny issue like “good faith” was brought up: he needed to hear his masters voice so he could parrot it in the meeting. This behavior was well-known.

It is very frequent that a hopelessly-compromised, compliant franchisee is forwarded as a spokesperson when a law is being proposed. this is where the term “House Slave” comes from: a, by comparison, a well-treated slave that protects his master’s interest, especially against the lower status slaves: the field slaves.

Humiliation is the usual punishment breaching the culture of franchising. The franchisee is felt to be alone (“Funny: You’re the only one who has mentioned this problem.”), the cause of the problem, lazy, overly critical and stupid.

  • To mortify someone is to make them feel deep shame for their beliefs or actions. New franchisees go through a type of “boot camp” (initial training) where their hours of work, dress, key personal relationships, etc. are all changed to fit the new, subservient identity called: a franchisee.

Shame corrodes everyone’s self-view as an autonomous adult. It decreases the person’s ability to resist authority.

The Courts: Guilt by Association This is the role of the Courts play in franchising since the Courts hold a monopoly on the coercive enforcement of the law in our society. Franchisees, lacking the conceptual and educational prerequisites to defend themselves, recoil reflexively at the thought of a lawsuit because they believe that only the guilty are ever sued.

  • The Court’s important and rightful cultural equity (respect for the law) is effectively high-jacked for the purely for the franchisor’s commercial self-interest. Since 95% of legal fees are paid by franchisors, their viewpoint is grossly overly represented (reinforcing the belief that “the Courts” are unfriendly to franchisees).
  • Based on a simple % of lawyers, a franchisee will always NEVER have a case to pursue.
  • The cost of litigation means even the most severe abuses are routinely never litigated.

No wonder I keep getting encouragement to keep writing via minor Ontario court officials: Justices do not like the law being used as a commercial intimidation tool.

  • Modern franchising mocks the law (only the rich can even hope to win) and in that way, is fundamentally anti-democratic.

The Coming Franchise Investment Bloodbath

November 10, 2008

tuningforkA tuning fork is an acoustic resonator in the form of a two-pronged fork with the tines formed from a U-shaped bar of elastic metal (usually steel). It resonates at a specific constant pitch when set vibrating by striking it against a surface or with an object… Wikipedia

If what Richard Solomon is saying over at Blue MauMau is NOT resonating with you, you’re a potential individual in…

…a sea of dead franchise fish stinking up the franchise world for many years to come in the near future.

Why?

Tens of thousands are exiting companies due to tough economic conditions. They have poor job prospects. They have access to half a million dollars and more in liquidity. They are considering small business ownership as their next move.

Whatever their prior experience, none has ever done pre investment due diligence on any small business investment, and none has ever done pre investment due diligence on franchise investment. Despite their education and experience, they are fish out of water.

You should read every word Solomon has to say. And then make sure your spouse does the same. Then give the article to any family member or friend you’d hit up to save your sorry future ass by throwing good  money after bad.

  • This advice goes double for those poor pathetic souls stuck in franchising now.

There are three types of franchisees and all of them are in a certain % of denial:

  1. the smug profitable ones (so the future is the same as the past? okay…),
  2. the ones just scraping by (can’t make ROI in good times but in bad times…?) and
  3. the ones bleed internally and anally.

No sane individual should invest or renew in any franchise heading into these worldwide recessionary times.

Richard’s advice stands on its own.


Everybody Knows Why they’re giving franchises away

October 3, 2008

Everybody knows the scene is dead
But there’s gonna be a meter on your bed
That will disclose
What everybody knows

Poetry is just the evidence of life. If your life is burning well, poetry is just the ash. Leonard Cohen

My love affair with franchising continues.


Everybody Knows

Performed by Rufus Wainwright

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows

Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died

Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows

Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that you’ve been faithful
Ah give or take a night or two
Everybody knows you’ve been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows

And everybody knows that its now or never
Everybody knows that its me or you
And everybody knows that you live forever
Ah when youve done a line or two
Everybody knows the deal is rotten
Old black joes still pickin cotton
For your ribbons and bows
And everybody knows

And everybody knows that the plague is coming
Everybody knows that its moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But theres gonna be a meter on your bed
That will disclose
What everybody knows

And everybody knows that you’re in trouble
Everybody knows what youve been through
From the bloody cross on top of calvary
To the beach of malibu
Everybody knows it’s coming apart
Take one last look at this sacred heart
Before it blows
And everybody knows

Everybody knows, everybody knows
That’s how it goes
Everybody knows

Oh everybody knows, everybody knows
That’s how it goes
Everybody knows

Everybody knows


%d bloggers like this: