Could franchise bankers also act as gangsters?

July 10, 2012

Are Canadian franchise bankers capable of engaging in “cartel-style anticompetitive corruption” in their $100-billion sales per year marketplace?

Every current or former Canadian franchisee who has had a Canada Small Business Financing loan may want to ask themselves some questions. My posts at  FranchiseBanker.ca (specifically: Banker “everybody is doing it” corruption admitted in the LIBOR scandal) might help frame your thoughts.

Without the Canada Small Business Financing program, many fewer deadbeat franchises would have been sold in the last 20 years.

Industry Canada asked me to jot down my concerns a few years ago.

Franchising Opportunism, a 20 page non-technical paper,  was the result.


Banks push fraudulent business debt using several financial instruments.

June 28, 2012

Ideas:


Franchisor-fronted, franchise bar-controlled and franchise banker-enabled associations fit the sociological definition of Organized Crime

June 22, 2012

The rules are well-known and ruthlessly enforced in associations like the IFACFA, BFA, and FCA.

The price for defecting from the group is very high.

Organized Crime
Ashley Crossman

Definition: Organized crime is a social system distinguished by a complex structure resembling a formal organization rather than a loose-knit collection of criminals. Criminal organizations have a hierarchical power structure, a complex division of labor that includes a management system, a formal system for keeping records, and clearly articulated rules that everyone is expected to follow. As criminal organizations become more complex, so do the varieties of crime they engage in. Some criminal organizations are even organized as franchises, much like fast-food restaurants.

Source: About.com Guide

It is a lot more complex than a traditional Cosa Nostra model.

Closer, perhaps, to an international cyber crime organization, trading  in intellectual properties and industry best (worst?) practices (see Cyber-capos: How cybercriminals mirror the mafia and businesses).

It’s the behavior, not what you call it that matters.


I’m just sayin’…

December 1, 2010

The ways of God in Nature, as in Providence, are not as our ways; nor are the models that we frame any way commensurate to the vastness, profundity, and unsearchableness of His works, which have a depth in them greater than the well of Democritus. Joseph Glanville.

These (all) things have a Life all their own.

A boat picked me up —exhausted from fatigue — and (now that the danger was removed) speechless from the memory of its horror. Those who drew me on board were my old mates and dally companions — but they knew me no more than they would have known a traveller from the spirit-land. My hair, which had been raven-black the day before, was as white as you see it now. They say too that the whole expression of my countenance had changed.

I told them my story — they did not believe it. I now tell it to you — and I can scarcely expect you to put more faith in it than did the merry fishermen of Lofoden. A descent

[ThemThangs]


The Simpsons, The Mafia and franchising

March 26, 2010

A smooth talker sells Marge on “mobile pretzel retailing.” But when sales go soft, Homer asks for help — from organized crime boss Fat Tony.

Marge: Homer! Did you tell the mafia they could eliminate my competitors with savage beatings and attempted murder?

Homer: [swallowing beer] In those words? … Yes.

Homer: I saw your pouring your heart and soul into this business and getting nowhere. I saw you desperately trying to cram one more salty treat into America’s already bloated snack hole. So I did what I could. I did what any loving husband would do! I reached out to some violent mobsters.

Full Transcript. From television episode, The Twisted World of Marge Simpson, original aired on Fox TV on January 19, 1997

Marge buys a pretzel franchise, fails to achieve her sales targets and violence ensues.


Clearly Lasik franchisor charged with trying to have partner & plaintiff whacked

December 7, 2009

Dr. Michael Mockovak (left) was arrested November 14 and jailed on $2 million bail.

Prosecutors have charged the eye surgeon with two counts of solicitation to commit first-degree murder.

These are two good articles about this:

  1. Clearly Lasik co-founder accused of soliciting murder of partner and
  2. Eye doctor charged with arranging hit.

To add insult to planned-injury the “bad” doctor maybe using franchisor funds to defend himself against charges of trying to have a Russian Mafia-type whack his partner, Dr. Joseph King (right in picture above), and their former associate, a Mr. Brad Klock of Vancouver. (see Doctor in murder-for-hire case also facing civil suit)

The quote I like the most is:

…”he [the bad doctor] held no personal animosity toward Dr. King, only toward Mr. Klock”

It is my experience that franchisors do not respond well to being aggressively resisted, especially being sued.

Below is a video of Dr. Mockovak while, it appears, Dr. King  is in hiding.


Solomon on flavours of Organized Crime

October 19, 2009

RichardSolomonRichard Solomon is a dangerous man.

In a Blue MauMau October 13th comment called There is more than one Mafia, Solomon poses these questions:

  1. Do you people really believe you are not dealing with organized crime?
  2. Do you really believe every organized gangster dresses outlandishly and eats spaghetti all day?
  3. Do you think that organized crime needs goons with guns to come around and shoot your children?
  4. Is it possible that you are all that stupid?

The same questions crossed my mind as I lifted the rock on 3 for1 Pizza and Wings to discover they collected royalty fees — in person — each week — in cash.

Solomon goes on to describe a much more sophisticated predatory life form:

The other Mafia is Anglo Saxon Protestant or worse; wears very conservative tailor made suits; went to all the best schools; has a daddy who set him up so well that he could hire lower orders to do his dirty work; lawyers and contracts instead of guns; and professional managers instead of button men.

Judging by methods and results, can you honestly distinguish between Tony Soprano and  Rick Schaden or Mitt Romney (Bain Capital)? Are you experiencing a more pleasant life under Mitt the Shit than you would under Tony Soprano?

Solomon “Get real, people!”

Pure Solomon.

Pure wisdom.


Franchising Burning: How to deal with Bullies

March 26, 2009

missiissippiburningDid I mention that I think Gene Hackman is a genius?

I do not universally like or dislike any side in any disagreement. I simply oppose abuse, bullying and stupidity. I refuse to allow myself to be bullied and I extend that courtesy to others.

U.S. labour law should be decided by citizens of the United States, not some fictional person called a corporation or their paid talking heads.

I have all the confidence that they can see through any fear mongering having to do with the Employee Free Choice Act.

REVISED: Why are these videos leaving YouTube? This trailer (Frank: “wringing a cat’s neck”) will give you the flavour.

====

Anderson: How ’bout you Deputy? How you with wringing necks, huh?

Deputy Pell:  Just keep pushin’ me, Hoover boy.

Frank Bailey: Now you get this straight, you cornhole fucker. You tell your queer-assed  nigger bosses up north that they ain’t never gonna find them civil rightsers down here. So you might as well pack up your bags and head you ass on back up north, back where you belong. Wake up…

Anderson: Now you get this straight, shitkicker. Don’t you go mistakin’ me for some whole other body. You got to have brains in  your dick if you think we’re gonna just gonna fade away. We’re gonna be here ’till this thing is finished.

How ’bout you, Deputy. Is that gun of yours just for show or do you get to shoot people once in a while?  Thanks for the beer.


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.


The Fixer: Getting professional thieves out of Trouble

January 6, 2009

fixtweedProfessional criminals have always relied on  The Fixer.

He is someone of high political, economic and career influence who solves a professional thief’s problem for a fee.

Secrecy and deceit are required because of the extra-legal nature of some of the work.

A historical example of The Fixer would be  William M. (Boss Tweed) Tweed of Tammany Hall. [see above]. Tammany Hall, likened often to a machine, ruled the City of New York from 1790 to to the 1960s.

People wonder why franchisors, franchise bankers, sales agents, the franchise bar, etc. can get away with [almost] bloody murder. A study of history of professional thievery can provide some hints:

The professional thief generally has a record in the Bureau of Identification as long as your arm, but after most of the cases “dismissed” or “no disposition” is entered. This is due to the thief’s ability to fix cases.

In order to send a thief to the penitentiary, it is necessary to have the co-operation of the victim, witnesses, police, bailiffs, clerks, grand jury, jury, prosecutor, judge, and perhaps others. A weak link in this chain can practically always be found, and any of the links can be broken if you have pressure enough. there is no one who cannot be influenced if you go at it right and have sufficient backing, financially and politically.  p. 82

Professionals within franchising make more money by fixing problems (sabotaging valid claims) than they do by solving them (reducing opportunism). It’s that simple: Less money is deducted from the theft when you fix a case, even after paying The Fixer’s fee. It is very easy for a franchise legal expert to lie to complaining investor [Credence good cheaters]. The lawyer knows that he is not under any legal duty to tell the truth until a solicitor-client relationship is created. And the proof is in the pudding: In 10 years, I know of no franchisee-lead case that would be considered a success by the investors themselves.

The fixer acquires his position with professional thieves by service. He tries to maintain a batting average of one thousand. Not all of them can do this, but their record is so good that the thief feels secure if a regular fixer is on the case. [Blonger, the Denver fixer for confidence men, had the reputation of not having one man sent to prison in twenty years under his protection.] p. 88

Modern franchising runs on political and economic influence. Our Australian friends are simply the latest who have been wised to that reality. Again, from the past:

Fixing is a mixture of finance and politics. It is primarily a financial transaction, bought and paid for by everyone concerned. But it is made possible by politics and often involves political favors as well…For the thief, fixing is almost always a financial transaction…from the point of view of coppers, clerks, and bailiffs, fixing is primarily a financial transaction…The prosecutor and judge are probably handled with more finesse.  p. 98-9

I have already used a tree as an analogy for Big Franchising (vast weight of organism is below ground: iceberg). Modern franchising has a visible and invisible nature (Overworld :: Underworld):

From the point of view of the fixer, also, this is a financial transaction. One fixer said to a thief: “Everything I get is bought and paid for, just as you pay me. No one gets any political or other favors.” The fixer can operate only if he has the consent and good will of those who are politically powerful. he may get a start on the basis of old friendships, but he can keep his position as fixer only if he kicks in. He must turn over to the political barons the larger part of what he gets from the thief, and his standing is determined by his reliability in dealing with them. p. 100

Thieves of nominally independent corporations (ie. franchisors, lenders, sales agents, legal, supply, etc.) would NEVER act with such arrogance if it were not for The Fixer’s protection racket. The weakest link is always the franchisee who 99% of the time goes away thinking they had a one-off bad luck with a cartoon-character type of franchisor thief. They are satisfied to receive 10% of their own money back and remain in silence via shame and contract. Professional franchising practitioners are, however, experienced and shrewd students of human nature.

No thief ever expects to have the bad luck to run into a case that cannot be fixed in some manner. This conclusion is not formed because of he thief’s conceit but because of his knowledge of the weaknesses and limitations of the average citizen and public official. p. 106

National franchisor associations act as a forum for coordinating Overground and Underground activities. The Fixer usually enjoys a very influential role such as Chief Counsel or Chairman of the franchisor controlled association. The Fixer is a lawyer because solicitor-client privilege harbours his clients’ extralegal activities. Politicians who are very often lawyers, know their political career is short and are not foolish enough to destroy their future legal earnings by crossing a mandarin partner of the some of the most influential and aggressive internationally-based, multi-line law firms.

It is sometimes believed that he fixer is the general boss of the thieves. This is an error. The function of the fixer is to get thieves out of trouble, not to control them. He often gives some advice to out-of-town professionals, after agreeing to take care of them. p. 107

The Fixer runs a monopoly on the most lucrative and industry-challenging cases [national, well-funded franchisees group or class-actions) while allowing the tactical fixing to happen to Tier 2 law firms who are seen as franchise experts within the franchise bar. The Fixer operates a protection racket that has the appearance of a law practice.

There is in every large city a regular fixer for professional thieves. He has no agents and does not solicit and seldom takes any case except that of a professional thief, just as they seldom go to anyone except him. The centralized and monopolistic system of fixing for professional thieves is found in practically all the large cities and many of the small ones. p. 87

Source: — The Professional Thief, Chapter 4: The Fix, The University of Chicago, 1937 [my emphasis]

I am at a serious disadvantage when discussing the subterranean nature of franchising. I am not a member of that brotherhood and have only caught glimpses of behavior that has piqued my interests over the years.

  • Professional thieves and modern franchise executives function in a similar way, in so much as they are primarily profit-making activities that need to manage risks and returns, under stealth.

They are highly energetic, charming, some exceptionally well-educated people who hold 2 conflicting ideas in their heads: They know they prey upon society but also want not to be an enemy of the state (which as profiting from crime, they surely are).

  • This internal, unresolved conflict (cognitive dissonance) accounts for their bullying, arrogant, irritable, defensive and plain mean behavior. They can’t ever quite buy their acceptance into respectable society.

They:

  1. possess highly migratory and portable special skills (especially persuasion, and communication),
  2. rely primarily on on-the-job training (often passed down from father to son, mentorship, tutelage),
  3. are highly congenial and supportive of other professional thieves (including competing trademarks, are compelled to warn and bail out even those they personally dislike),
  4. steal in a full time, planned and methodical manner,
  5. converse privately in a highly-specialized language (argot: legalese, mumbo-jumbo)
  6. achieve recognition for competence from other peers (who you know is important),
  7. operate in a very rigidly adhered to code of behavior, and [above all else]

8. particularly loathe anyone that (a) would inform “squeal,” or “squawk” and/or (b) has yet to lose their integrity.

They inhabit a modern version of The Waste Land or purgatory. Their only defense is confusion and attempting to degrade those impertinent enough to hold up a mirror to their face.


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