Roubini and Taleb on Nationalizing Banks

February 11, 2009

mindtrip

Anyone that throws cash at a franchise now (starts, renews), has lost their mind.

  • Please note: No one invests in a franchise. You simply rent an alleged proven system and a trademark for some period of time.
  • You may think you own something of value but that is a type of sleep-walking that you will awaken from.
  • How long will you continue to feed a corpse (ie. continue to make payments into an already collapsing fraud)?

Nouriel Roubini and Nassim Taleb know what they’re talking about, notwithstanding the pettiness of people like Paul Krugman. I did study political economy and using communism as a straw dog argument is unbecoming  anyone that calls themselves a professional economist.

  • Unless, of course, bringing Monty Python in was Herr Krugman’s idea of a joke.
  • That may be a sense of humour not shared by the +500,000 U.S. laid off workers last month.

Nationalize banks (guaranteeing bad debts and a  “bad bank” won’t work).

  1. Don’t reward known thieves and reckless risk-takers.
  2. Cash is King (keep what you’ve got).
  3. Compensation IS the source of the problem.
  4. It’s only started (massive deleveraging still to happen).
  5. The recession could be 10 years long.
  6. Obama’s bailout plan is a BUST.

And don’t listen to the media morons.


Hidden Risks: Franchising as a poisoned apple

February 4, 2009

You know 100% of the time you’re dealing with a snake if they say franchising is safer than independent business.

snakeappleU.K. predators are still able  to get their media release lies printed as truth.

Comparing franchising with non-franchised businesses is normally an exercise in concealing risk. Hiding risk is exactly what caused the current economic meltdown.

Franchised businesses have unique risks:

  1. usually from several directions,
  2. very powerful because they are unexpected,
  3. many of them at play (hiding in plain sight),
  4. both sudden and slow (blow up versus slow bleed),
  5. unknown by franchisees (most veterans have no idea), and
  6. activated when the investor is least able to defend themselves.

I have identified 344 risk situations that you will face that you would never face in an independent business. There is an old saying: To a blind man, everything is sudden.

These are 8 of them in no particular order of danger:

3.  101 ways to terminate a contract
45.  Churning (serial reselling)
80.  Encroachment (too many outlets put in territory)
168.  Insolvent system renamed and sold to a relative
264.  Right to associate and right to harass
296.  System designed to fail for franchisees
317.  Trial decision always appealed
337.  When the franchisor tanks, so does the franchisee

Note that all of these risks are within every modern franchise. The franchisor decides unilaterally which tool they are going to use, on what franchisee, at this time.

  • Most tyrants keep their serfs compliant by using extreme measures very infrequently.

Sure there’s the occasional Rwandan genocide. The machete’s not needed because the stories are retold of what happens to the minority that stood up for their rights.

This is the role that public stoning or crucifixion played in a previous empire.

If you’d like to take a look at all of the 344 risks I’ve collected over10 years in the Information Sharing Project, here’s the pdf.


No franchise law: New Zealand as a Tier 2 economy

February 2, 2009

greenacreslogo1Humans have evolved a large brain to help in our survival.

It does a very good job but sometimes  it get tricked up in seemingly simple differences.

One of these is the difference between the words rent and own.

  • You rent a franchise.
  • You own a non-franchised business.

Understand? You own no thing/nothing when you rent a logo. Don’t look for equity: It does not exist in franchising.

Modern franchise law defines two terms:

  1. A franchisee is the end consumer or licensee.
  2. A franchisor is the owner and any of his “associates” (sub-contractor, selling agent, etc.)

Franchise law defines what a franchisor is very widely and a franchisee very narrowly for a very good reason: franchisors will try to wiggle out of their responsibilities by pointing to someone else in the selling chain when it hits the fan.

They are as bi-polar as U.S. bankers: laissez-faire in good times, socialists in bad.

A recent New Zealand Herald article shows this:

Auckland, Feb 2 NZPA – An Auckland man charged with fraudulently obtaining $3.5 million from people he granted Green Acres sub-franchises to, has re-appeared in court.

Keith Lapham faced three fraud charges alleging he obtained money by deception from 172 people while he was a master franchisee for Green Acres from March to December 2007.

Lapham was remanded on bail to a pre-depositions hearing in April when he appeared in Auckland District Court today.

His lawyer Peter Davey said an extra two months was needed to examine more than 30,000 documents disclosed by the Serious Fraud Office.

Lapham was an independent contractor and the Green Acres company was not the subject of any investigation.

There are only two terms: franchisees and franchisors & their associates in any jurisdiction with a half-assed franchise-specific law. Can’t really fault the Herald:

New Zealand is a Tier 2 economy in refusing to pass a specific-franchise law.

This government inaction is called enabling consumer fraud.

Questions

  1. Is it any wonder that Mark Bryers, a lawyer, structured the Blue Chip fraud as a franchise?
  2. With lots of people like Mark Bryers, being attracted to franchising, what’s the probability that it’ll happen again?
  3. Is it reasonable for Kiwis to expect more backbone from their government than having Minister Dalziel making her announcements on franchise regulation from the franchisor-only trade shows?

In contrast to almost all of the G20 countries that have a franchise law, it must seem that it’s like shooting fish in a barrel in running a franchise scheme in New Zealand.


The Class War is Over, and We Lost

January 30, 2009

redstallionFranchising is one part of a bigger picture.

Increasingly, it is more difficult for good people to do ignore this hollowing out. You make your choice by choosing to do nothing.

My brother-in-law Leo ran a gas station and then had a Red Stallion franchise. His dad ran the same 2-bay Sunoco garage in the east end of London, Ontario for decades.

When I was just starting into looking into franchising, about 10 years ago, Leo said something that I remembered when I watched the video below:

Franchising is just a part of the puzzle, Les. They’ve been screwing small businesspeople for years and years.

It’s like a lot of things” is what Gordon Pitts said this to my wife in 1998 when she called about franchising. Pitts is the  editor at The Globe and Mail newpaper, Canada’s national business daily.

Below is a video 9:43 video with Bill Moyers interviewing economist Dean Baker and journalist Bob Herbert. Dean is a frequent contributor to Beat the Press weblog where his comments seem ring true.

These are my impressions:

  1. Franchising is only one part of  an ongoing economic clear-cutting of non-elites.
  2. Predatory actions are the new American Dream, including small business lending.
  3. The media is not asking for solutions, they’re part of the problem (bias is not recognized).
  4. Listen to the nuns: chicanery happens when you neuter the watchdogs.
  5. Bailouts have zero accountability (paying out the elites who got us in this mess).
  6. Debt enslaves. Usury is a forgotten concept.
  7. Any collective impulse such as unions (or Independent Franchise Associations or national groups of IndFA) is ridiculed which maintains the elite’s control.
  8. Employers simply terminate troublemakers: It’s cheaper to drag it out for 2 to 3 years and pay a small fine, if anything at all. Ditto in franchising.

I never really thought about class warfare before.

  • I think about it a lot more lately.

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.


It is difficult to get a man to understand something when his job depends on not understanding it.

January 2, 2009

Upton Sinclair (1878 – 1968) was a Pulitzer Prize-winning prolific American author who wrote over 90 books in many genres and was widely considered to be one of the best investigators advocating socialist views. He achieved considerable popularity in the first half of the 20th century.

usseal

He gained particular fame for his 1906 novel The Jungle, which dealt with conditions in the U.S. meat packing industry and caused a public uproar that partly contributed to the passage of the Pure Food and Drug Act and the Meat Inspection Act in 1906. Wikipedia

I aimed for the public’s heart, … and by accident I hit it in the stomach.

Sinclair’s 1927 novel Oil! was the basis of the 2007 movie There Will Be Blood , starring Daniel Day-Lewis and Paul Dano. The film received eight nominations for an Oscar, and won two.

Other Quotes

You don’t have to be satisfied with America as you find it. You can change it. I didn’t like the way I found America some sixty years ago, and I’ve been trying to change it ever since.

The private control of credit is the modern form of slavery.

The American People will take Socialism, but they won’t take the label…Running on the Socialist ticket I got 60,000 votes, and running on the slogan to ‘End Poverty in California’ I got 879,000. I think we simply have to recognize the fact that our enemies have succeeded in spreading the Big Lie. There is no use attacking it by a front attack, it is much better to out-flank them.

Fascism is capitalism plus murder.

The methods by which the “Empire of Business” maintains its control over journalism are four: First, ownership of the papers; second, ownership of the owners; third, advertising subsidies; and fourth, direct bribery. By these methods there exists in America a control of news and of current comment more absolute than any monopoly in any other industry.

American capitalism is predatory, and American politics are corrupt: The same thing is true in England and the same in France; but in all these three countries the dominating fact is that whatever the people get ready to change the government, they can change it.


Madoff investor takes own life

December 24, 2008

reneI know very little about hedge funds and how they are managed.

I do, however,  have some experience in dealing with people who are confused, suffering from temporary distorted thinking and have had their confidence in themselves profoundly shaken.

Fraud is primarily a violent attack on the victim’s identity and his core belief in the predictability, if not fairness, of his world. No one I have known lists economic loss as even a minor consideration, if they come out of the valley. Excuse me for  suspending  judgment as I remember those that didn’t make it out of franchising alive.

The New York Times reports that Mr. Rene-Thierry Magon de las Villehuchet, founder and CEO of hedge fund Access International Advisors, LLC, was found dead yesterday. It appears that that the fund has about $1.4-billion exposure in the Bernard Madoff affair.

I do not know precisely the pain that drove who appears to be an extremely sophisticated, successful and dignified individual to commit suicide. If the coverage in The Toronto Star is any indication, he presented as one classy person.

  • Beyond that, I have no right to judge anyone else.

Maybe he felt he had committed an unforgivable error by trusting Madoff? That he subscribed to the belief that “To those whom much is given, Much is expected“? Maybe he felt if he was smarter, worked harder, paid more direct attention he could have prevented this loss? Maybe it’s just random, there is no connection at all: It’s just the media picking up on mob’s cries for “some rich elitist bastard to pay” (regurgitation of Storming of the Bastille, off with his head).

  • Who knows? Only time will tell but that story carries its own biases.

Galbraith‘s The Great Crash 1929, however asserts quite strongly that the incidence of suicide did NOT increase because of Wall Street’s collapse:

In the United States the suicide wave that followed the stock market crash is also part of the legend of 1929. In fact, there was none.  p. 131

I suspect that time and hindsight will reveal that Madoff’s alleged (in quotes) “ponzi scheme” was business as usual in today’s perverted form of casino capitalism (eg. the only difference is that this sausage exploded; hundreds of other fraud sausages happily robbing Peter to pay Paul).

What I do know, is that his family will miss him and that this loss sucks at this time of year. I’ve lost way too many people in December.

When everything’s black, let’s hope that each of us has at least one person to talk to.

  • Let’s keep in touch with each other, ok?

Reza Solhi and 3 for 1 Pizza & Wings

December 22, 2008

3for1pizza11

Sean over at FranchisePick asked me if I knew of Mr. Solhi’s work.

Please note the first 6 articles that the Information Sharing Project would return if it were alive on the internet (searched for tradename). Download the entire article if you like.

  1. Frustrated franchisees call for legislation, The Globe and Mail, December 3, 1998 Excerpt from article: Jesu Dasan figures he lost $180,000 in the 20 months he operated a fast-food franchise in Scarborough, He alleges the franchisor changed the terms of the contract, which drastically reduced the number of homes his business was allowed to service. [download pdf]
  2. Ontario introduces bill to protect franchisees, The Toronto Star, December 4, 1998 Excerpt from article: “Everything goes to (the chain) … These people cheat us and we’ve lost everything.”…Vahdati said she and her husband spent $100,000 on legal costs in a fruitless court fight against the pizza-chain owner. [download pdf]
  3. New franchising  law called sales job: Ignores ongoing illicit practices, operator rep say, The Toronto Star, December 5, 1998 Excerpt from article: “This is the wooliest thing I’ve ever seen,”…Commercial Relations Minister Dave Tsubouchi “is just like one of the franchise hustlers,” said Stewart. “He’s selling an idea and there’s nothing in it.” [download pdf]
  4. Franchise laws welcome, The Toronto Sun, December 8, 1998 Excerpt from article: “What a disappointment.”…“This law is worse than what exists now, which is nothing,” snapped Les Stewart, founder of the Canadian Alliance of Franchise Operators. “It will only lull potential entrepreneurs into a false sense of security.” [download pdf]
  5. A declaration of war: breaking into the business, The desperation tactic of gaining entry to a locked business, known as ‘self-help’, is seen as an occasionally useful skill when relations hit a sour note., The Globe and Mail, January 13, 1999 Excerpt from article: Gaining entry to a locked business under cover of darkness isn’t taught in franchise manuals, but it’s a skill that both franchisees and franchisors occasionally find useful. [download pdf]
  6. The great franchise trap, The Indo-Canadian Voice, January 15-27, 1999 Excerpt from article: The family lost $150,000 and sadly, the man who put his life’s savings on this scheme, is today on welfare…“These people need to be protected. It is mostly the new immigrants who fall victims to such schemes. And in Ontario, there is very little by way of laws that can protect them in times of dispute.” [download pdf]

Anyone know what happened to these franchisees who were mentioned in the articles?

  • Wasim Ansari,
  • Tarek Fatah,
  • Rayappu Jesudasan [Jesu Dasan],
  • Ali Mahmoudzadeh,
  • Nhan Van Nguyen,
  • Fereshteh Vahdati, or
  • Ali Mehmood Zadeh

Or the other  people?

Richard Cunningham, John Deverell, Peter Macrae Dillon, Howard Hampton, Mike Harris, Murray Katzman, Linda Leatherdale, Ned Levitt, Tony Martin, Reza Solhi, John Southerst, David Sterns, David Tsubouchi, Dawn Walton

And these organizations?

Ministry of Consumer and Commercial Relations, Canadian Alliance of Franchise Operators, Canadian Franchise Association, 3 For 1 Pizza and Wings, McDonald’s, Tim Hortons, Golden Griddle,  Siskinds, Cromarty, Ivey & Dowler, Canadian Tire, 3 for 3 Pizza Ltd., Canada Post, Ontario New Democratic Party

The sympathetic Toronto lawyers are there to manage your anger. That’s their job for the industry: a soft landing, breeding passivity.

A franchisee white knight (the appearance of franchisee advocacy while acting to weaken franchisees’ rights; a traitor) lawyer:

  • to ensure that learned helplessness infects the immigrant leaders by raising then dashing your hopes for justice.

No Canadian lawyer can survive financially by representing only franchisees. It is impossible. They HAVE to have to behave in an acceptable manner (don’t rock the boat) or the industry elite will not allow them to exist.

  1. The appearance of an opposing position provides the pretense of industry balance to outsiders.
  2. You are NOT protected by a lawyer’s theoretical fiduciary duty to a client when you talk to them initially. That protection is ONLY when you are in a solicitor:client relationship (a contract: agreement, money exchanged, etc.). Do NOT rely on his advice at this stage: He maybe protecting the industry’s interests (not yours).
  3. Because law services are a credence good, you never know exactly how or when your interests were sold down the river.

The antidote to compromised legal representation is a knowledgeable second opinion (ie. a consultant who does not make his living from the industry). They’re rare but if you know where to look for them, they’re out there.

But I’m the most special of all:

I seldom charge anything for my advice to franchisees.

It’s my way of giving back to an industry that has given so much to me and my family over the last 10 years. Call today 1-705-737-4635 and let’s discuss if the lawyers or I was more accurate in predicting Ontario’s franchise industry’s degeneration from 1998 to 2008.


Eggspectation: Cracks in U.S. expansion dreams?

December 17, 2008

eggslowSean Kelly over at FranchisePick has a great article (Low Eggspectations: How NOT to Handle a Franchise Dispute) about the Montreal, Canada Eggspectation franchisee that had his store dumped out onto the street last week.

They are very relevant to all franchisors and investors at all levels in North America:

Publicly dumping the franchise restaurant contents on the sidewalk for the city’s garbage cops to deal with was the ONLY option CEO [Enzo] Renda could come up with? [Sean’s emphasis]

Navigating a franchise dispute is extraordinarily difficult and requires leadership skills that this franchisor clearly does not possess.  A franchisor CEO must be able to justify to other franchise owners, stakeholders, employees and sometimes customers that the harsh action they must sometimes take is necessary in order to protect the brand image that is their greatest asset.

In this case, Renda likely caused more embarrassment to the chain and damage to the Eggspectation brand than his errant franchisee ever could have.

Not eggsactly eggstraordinary brand strategy for a company that hopes to open 70 units in the U.S.

I agree. It takes skill, patience and maturity to operate a stable, let alone grow a franchise system internationally.

The comments are interesting. They include a Montreal Eggspectation franchisee named Paul Plaitias coming to the franchisor’s defense. How unusual.

When there is a CANCER [presumably the exiting franchisee] in your system your only goal is to remove it as quikly (sic)as possible before it spreads.
This was the only way that the Franchisor was able to protect all of his Franchisees.

I THANK YOU ENZO RENDA and
JIMMY SKINDILIAS!! [franchisors]

From Paul Plaitis
For Eggspectation Complex Desjarsdin

I have differentiated between House Slave and Field Slave in a previous post called  House Slaves in Franchising and put it into cultural norms within Silencing Dissent via Humiliation. Time will tell if Mr. Plaitis is playing the role of House negro while the exiting franchisee is a little bit more of the field variety.

  • Carol Cross’s view is more than warranted when viewing franchising.

However, two other media outlets weighed in (so far):

1. The Montreal Gazette :: Bailiff gets cracking, shuts Eggspectation by Jan Ravensbergen. The exiting franchisee’s name is Newton Bastiampillai and it appears Joseph Ionata is his lawyer. Billy Katelanos (Gowling?) seems to be the franchisor’s lawyer.

2. The Toronto Star (Canada’s largest daily newspaper) :: Eatery spills out into Montreal street
Contents of failed diner tossed onto sidewalk; booze, other items taken before police arrive

Thanks for the graphic Sean.


Undue Influence: The Case of the AUS Professor

October 20, 2008

Publicly funded institutions can become co-opted or captured by special interests.

Some university faculties have a better or worse reputation for pandering to special interests when compared to other disciplines. Business schools are not well respected by other faculties for their independence of thought.

I’ve seen it at my old school and confirmed it in other universities as well.

The Greeks defined 3 modes of persuasion:

  • logos (reliance on facts and figures: can be true or false),
  • ethos (authority, honesty of speaker, morality), and
  • pathos (appeal to emotions, sense of injustice, outrage).

Franchisees appear in front of public hearings and rely almost entirely on the rhetorical device of an appeal to justice: “It’s not fair that they did this and that.” Policy makers listen and judge its “truthiness“.

  • Generally, their narratives are concrete, visceral and credible.

Big Franchising responds if they have any remaining credibility, directly with at times shaky logos and ethos.

1. Consider the following article in Australia’s SmartCompany: Survey reveals drop in franchising disputes as franchising inquiry continues.

It says:

A new survey of Australia’s $130 billion franchise sector has shown disputes between franchisees and franchisors have declined, with just 2% of Australia’s franchisees classified as being in dispute.

Let’s stop there and list the persuasive assumptions that this single sentence relies upon:

  • survey: a scientific, logical, rational, independently verifiable academic study that is reviewed by other academics [did it appear in a refereed academic journal? no],
  • $130 billion sector: size matters: infers that big = successful, growth is good [uses social proof, is a huge credit crisis and run-away cancer growth good?],
  • declining number of disputes: situation is getting better [what is a dispute? how many have abandoned? is the mean dispute big or small?],
  • just 2% of franchisees in disputes: tiny problems, inconsequential, minuscule [can use anchoring to deceive].

This opening sentence is strictly a blatant misrepresentation, lacking in any connection to formal logic or any verifiable measure. The “just 2%” is a hallmark give away as to lack of any journalistic standards or any pretense of editorial oversight. Shame on SmartCompany but why is a university named?

If the 2008 Report is similar in method to the 2006 Report, it may be junk science: bought and paid for by its funders, the Franchise Council of Australia. Franchisor-controlled associations are well-known for blocking any changes to a statute, regulations and public regulatory body mandate.

You decide.

2. Next, let’s take a look at more detail into the role of the Griffith University. See the FCA’s media release: THE POWER OF ONE STRONG SECTOR REVEALED IN POSITIVE RESEARCH FINDINGS

Authority is clearly defined as another Weapon of Influence by social psychologist Robert Cialdini that can be applied to universities. They can be used to give the impression of academically rigorous research when really the work is simply a consultant’s report.

  • I don’t begrudge business admin profs or their peers earning the vast majority of their income from consulting to one or the other industry.
  • What I wonder is whether it is appropriate for an academic to overstates their conclusions (either intentionally or unintentionally) during a time of national lawmaking?

    You decide if Professor Powell has exercised undue influence or abused his duty:

    “The continued growth and maturation of Australian franchising is impressive, particularly considering the current economic outlook, a recent change of government, and a franchising sector that has faced close government scrutiny” said Professor Michael Powell. Pro-Vice Chancellor (Business), Griffith Business School.

    Did Professor Powell interfere with the Parliamentary Joint Committee on Corporations and Financial Services’s Inquiry into the Franchising Code of Conduct? I checked the 140 written submissions and didn’t see his name.

  • The test could be: Did he know or would he be reasonably been expected to know that his publicly funded authority could be used used to influence [inappropriately interfere?] with the operation of a  parliamentary committee?
    1. True scholastic work is published in refereed professionally-recognized journals to ensure high quality (an editor and reviewing peers, correct methodology, usually a very, very narrow scope, transparent auditing, meets ethical and conflict of interests standards, vetted before publishing, etc.). There is a whole series of checks and balances to weed out biases [innocent and not so innocent].
    2. Consulting work, no matter how many PhDs are piled up, has none of these centuries-old safeguards in place.
    • Blurring these lines is not fair, especially during a time of a fairly controversial public lawmaking process.

    Academic research is a credence good and as we have seen, is susceptible to cheating because “Joe Public” cannot determine if it is the appropriate quality or quantity.

    I have read enough articles and progressed far enough in a good school to seriously question the validity and reliability of this work. I imagine any academic that values their reputation would not rely or quote this report in their submission to the Joint Committee.

    Unfortunately, some scholars are more closely attuned to serving dominant commercial objectives rather than the pursuit of reality-based truth (as opposed to power-based truth) as is their duty as a tenured academic.

    My qualifications only go so far to speak on behalf of academic rigour and the arguments not made [eg. sunk costs as the primary and unique source of franchisor opportunism] in the current Australian public hearing.

    If a second opinion were to be sought, I believe Gillian K. Hadfield might be an appropriate candidate. pdf CV


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