“Revolutionary Decisions” happen only when franchisees persist

July 3, 2012

Canadian courts are willing to expand protections to the most vulnerable in franchising.

Very well-respected franchise journalist Janet Sparks reports at Bluemaumau.org: Revolutionary Decision against Dunkin’ Donuts Awards Owners $16 Million.

MONTREAL – In a harshly-worded ruling in favor of franchisees, a judge chided Dunkin’ Brands Canada Ltd for its incompetence, negligence, and lack of support to store owners. He then ordered the international sub-franchisor to pay the 21 former franchise owners, operating 32 Dunkin’ stores, C$16.4 million (US$16M) plus legal fees.

The lawyer for the franchisees is absolutely correct in emphasizing the need for persistence by franchisees:

Frédéric Gilbert of Fasken Martineau, who represented the franchisees, said the Tingley decision will have major repercussions on how franchisees are protected and how franchisors’ responsibilities are defined. “Justice Tingley has issued a rigorous judgment that has all the makings of a landmark franchising case in Canada. This decision will become a reference tool for setting the basic guidelines governing contractual relations between parties,” stated Gilbert.

Gilbert believes that the determination and solidarity of the group of franchisees suing Dunkin’ played a key role in this legal action. “These people courageously overcame the many negative repercussions of what has been a very long saga. They valiantly confronted the countless financial and human pressures that are often seen in battles pitting David against Goliath. Even at their weakest moment they never gave up the fight, which is all to their credit.”

While being appealed, this decision may become a landmark in franchising.

Resources


Capital must accumulate and patiently wait

November 8, 2011

A for-profit, multi-share  corporation is the only effective means of preventing future franchisor opportunism.

Only got non-profit, dues-supported IndFA after 3 years?

  • License for impotence at best, failure at worst.

Only interested in a Band-aid solution to franchisor over-reaching?

October 21, 2011

Write your issue bitch on a post it and put it on the wall.

Choose the most severe one and sue your franchisor.

  • Won’t they just take the $ back via another way in a few months?

Thirty problems? Hell no: 1 problem with 30 manifestations.

The 1 Problem: Opportunism

  • the unfair exercise of franchisor discretion within the necessarily incomplete contract.
  •  self-interest with deceit.

To stop opportunism: create and maintain an indexed document database/wiki that is owned by a well-run and monitored franchisee association.

  • Indpendently, command the information high ground and you’ll buy your business back rather than rent a few $ in short-term litigation.

Otherwise, Dance band on the Titanic.


Due diligence cannot prevent much greater post-sale risks

April 24, 2011

Risk assessment is a snap-shot.

Franchising favours the house (franchisor).

If you play a Game of Chance know before you begin

If you are benevolent you will never win.

William Blake 1757 – 1827


Franchising: Trap for the Trusting by Harold Brown

April 8, 2011

Written in 1969; franchisor opportunism has become worse.

Inside cover:

This book is designed to inform the public and the legal profession of the egregious imbalance that exists in the franchise relationship and to suggest various forms of redress by means of litigation and legislation. By discussing (and printing) the contents of the usually secret franchising contract in complete detail, the author makes the reader thoroughly familiar with such inimical and routine restrictions as the covenant not to compete, the informer clause, supplier kickbacks, the “bad boy” clause, the “yellow  dog” clause, arbitrary termination, the suspension clause, and many other forms of contractual coercion, both stated and implied.

For too long the law has permitted franchisors to invoke “quality control” and “sanctity of contract” to ruthlessly enforce their unjust agreements…

Until definitive franchising legislation is passed, FRANCHISING: TRAP FOR THE TRUSTING can show the reader how to avoid the pitfalls of the standard franchising agreements or provide his attorney with a blueprint for seeking relief through existing statutes and case law. Arguments and citations from the franchise related fields of fraud, equity, securities regulation, Anti-trust, and labor relations are included.

Still Unsafe at any Brand.


Franchising creates and enforces a caste system

February 11, 2011

Franchisor opportunism can be both very rare and effective in enforcing obedience.

Obedience is enforced by controlling intra-species and inter-franchisee communication and contact.

Annual meetings, bulk emails, newsletters, site visits and faux franchisee-friendly social sites get the lesson out:

stay in your place or suffer the consequences.

The means may change but the objective stays the same.

[What was Jim Crow?, Jim Crow Museum of Racist Memorabilia]


Opportunism during wartime is a very old idea

January 15, 2011

Franchisors controlling the price of needed supplies is an evil.

This central fact is true no matter if the public or franchisees understand they’re being gouged. Similarly, a state of war can certainly exist before it has been declared.

Every franchisee is at war with their franchisor over tied buying provisions, irrespective of the profits that each may or may not make.

Winsor McCay 1867 – 1934

[Golden Age Comic Book Stories]


Do franchisee attorneys cheat at settlement time?

October 6, 2010

Attorneys provide services that economists classify as credence goods which are quite susceptible to fraud.

Franchisee attorneys sometimes act on their own self-interest because only the elites know the game and they mostly keep their mouths shut. After the confidentiality agreements are signed, there is very little danger of client complaints.

Here is one perspective on the U.S. Quiznos class action lawsuit settlement process that resonates.

If you were a conspiracy theorist, might you suspect something like…..

The lawyers for both sides colluded to end the case in a manner that got the franchisees nothing; cost the franchisor nothing other than its legal fees (because the debt written off was worthless anyway); the “benefits” to the franchisees are illusory and valuless; the judge would sign off on anything just to clear the case from his docket so long as he had some/any piece of paper in the record saying that the franchisees were getting real value; and they found a valuation “expert” with a degree in alchemy.

NAH! THEY WOULDN’T DO THAT.WOULD THEY?

Richard Solomon has over 40 years of franchise law experience in the United States and his Franchise Remedies site is an important resource.


Would it be better to have no legislation? That’s a no-brainer.

September 29, 2010

EPSON scanner Image

The public hearings that led to the Ontario Wishart Act (Franchise Disclosure), 2000 started on March 6, 2000.

  1. The first expert witness was Ms. Susan Kezios from the American Franchisee Association (her testimony, above to right).
  2. Mr. John Sotos was the next of the five expert witness (40 in total :: 4 days :: 4 cities) was a Toronto attorney called (his full testimony, left).

Mr. Tony Martin, a politician from Sault Ste. Marie  asked Mr. Sotos a question:

Mr Martin: Would it be better to have no legislation than to put a piece of legislation in that gives people a false sense of security, given some of the statistics?

Mr Sotos: That obviously is a no-brainer. The purpose of legislation is remedial, it’s to correct a problem. If the legislation doesn’t achieve that, then I think it’s misplaced.

“That obviously is a no-brainer.”

  • summum ius summa iniuria –  The more law, the less justice

Private equity freaks are savages

September 20, 2010

Hatched in the dark so they can survive sunlight.

Heads-up to franchisee vegans when the PE guys show up for dinner (ie. your family’s equity):

get some MBA-type advice because your franchisor is was  a pussy cat in comparison.

Thanks to ILoveCharts


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