Where’s Mark Bryers? With Waldo in AUS, of course.

September 4, 2008

The children’s game, “Where’s Waldo?” was a big hit with my kids a few years back. Here is a link to Waldo Wiki for some fun.

Otherwise, it appears from New Zealand’s One NEWS that the Blue Chip founder is somewhere in Australia (Blue Chip hope sparked by frozen funds).

Hundreds of Blue Chip investors across New Zealand have been given fresh hope that they might be able to recover millions of dollars worth of deposits for apartments they never wanted to buy.

The High Court has frozen funds in solicitors trust accounts until a full hearing takes place later this year…

We’ll wait and see if any cash actually surfaces from freezing the lawyer’s escrow accounts for the 2,000 seniors (mostly) who have lost over $84-million.

It does seem that Mr. Mark Bryers is keeping a pretty low profile these days. It appears that lawyers are having a hard time tracking him down in Australia to serve him with bankruptcy papers.

And what does one of the 2,000 investors [$1-million lost as a condition of re-locating to Britain] have to say about Bryers’s moving to Australia?.

“And now he’s off to Australia to do the same to people over there, I just – unbelievable,” says Blue Chip investor Michelle Hickman.

Altered loan documents, fraud and an agency relationship you say? Mrs. Hickman’s intrepid barrister Paul Dale:

“Certainly on the affidavit evidence we have filed to date, there has been fraud. We have produced examples of altered loan documents,” says Paul Dale the investors’ Barrister…

Dale says he has got powerful evidence of a profit sharing agreement between Greenstone and Blue Chip which would have seen money flow to Mark Bryers when apartment projects like this were completed.

Like I said before [Oz Alert: Shrewd businessmen immigrating], if you bump into Mr. Bryers or Bob Bangerter, let me know.

Sue Big Franchising: franchisor, lawyers, lenders, sales agents, developers

September 2, 2008

Neil Hickman, with wife Michelle and their children Lewis (6) Lauren (11) and Holly (10), moved here from the UK for a better life but have lost their life savings after investment company failures. Photo / Martin Sykes

Good job: Naturally, raise enough doubt to have the contracts set aside as unenforceable because they were based in fraud.

More body parts are washing up on New Zealand’s shoreline in the continuing Blue Chip scandal.

See my post on the family on the left, Kiwi scams touch all classes of immigrants and the New Zealand Herald’s original article, Immigrant banker put $1.7m in Blue Chip).

The Herald says this week:

The investors claim the agreements are unenforceable.

They say Greenstone and the Blue Chip group had an agency relationship, including a profit-share arrangement. They are also taking action against three Blue Chip-recommended lawyers over the advice they gave – Jonathan Mathias, Zeljan Unkovich, and Hamilton firm Foster, Milroy & Turketo.

Okay but Jenni McManus and BusinessDay.co.nz really gets into the details in Blue Chip investors sue their lawyers:

Eight out-of-pocket investors in bankrupt property company Blue Chip are suing their Blue Chip-recommended lawyers for breach of duty for their handling of millions of dollars worth of apartment purchases due to settle within weeks.

They say lawyers Jonathan Mathias, Zeljan Unkovich and the law firm Foster Milroy & Turketo who habitually did Blue Chip work, were recommended to investors for legal advice when buying apartments in the Barclay development in downtown Auckland about two years ago.

The investors claim they were dissuaded from using their own lawyers by Blue Chip, who they say told them its property schemes were complex and their own lawyers might not understand how they worked.

But Mathias, Unkovich and Foster Milroy & Turketo regularly did Blue Chip-related work and knew how the schemes operated, the investors say they were told. Some say Blue Chip threatened not to pay their legal fees unless they used lawyers Blue Chip recommended. Specifically, the plaintiffs allege the lawyers failed to advise them of the implications of the transactions they were signing or to give them any advice about the documentation.

So its the lawyers and franchisor only? No: Here are the lenders, sales agents…

The claim is part of the first significant lawsuit against Blue Chip. Other defendants have been named as Greenstone Barclay Trustees, GE Custodians (a lender), Tasman Mortgages and Executive Mortgages (mortgage brokers) and Blue Chip associate Bribanc (now know as Vault Realty).

Fraud claims have been brought against Tasman and Executive, where it’s alleged one or both fraudulently altered the loan documentation for one investor whose income was misstated, and mortgages were obtained from GE Custodians on the basis of fraudulent conduct.

…but last if not least, the property appraisers.

Described by Dale [Paul Dale, the Hickman’s lawyer] as naive and unsophisticated investors, the Hickmans also relied on a valuation from Blue Chip associate Bribanc Real Estate that they did not even see. Dale is arguing that, as with several plaintiffs’ properties, their apartment was over-valued.

They are seeking an injunction and although I am not a lawyer they appear to have to satisfy a pretty low legal standard:

…all the plaintiffs need prove is that they can mount a credible argument against the developers and Blue Chip.

Whatever happens, there were no aligned interests or a conspiracy to commit fraud. Only a nut-job would ever think such a thing.

So you want to Sue someone, do you?

July 25, 2008

Before you rush to sign up, buy this movie. And then buy the book. A Civil Action is perhaps the most accurate portrayal of civil litigation. Ever.

You’ll have to do what you can do but it has many excellent lessons. Understanding the economics of a lawsuit drives the outcome much more than the facts.

  • Out of the pan and into the fire…

A good article from The New Zealand Herald about the building feeding frenzy to assign Blue Chip legal responsibility. It appears the range and numbers of professionals potentially liable is growing.

Maria Slade reports:

Grimshaw & Co is joining a growing bandwagon of lawyers and burnt investors seeking to make professionals liable over the advice they gave.

A range of professionals are in the lawyers’ sights, from financial advisers and solicitors, to valuers, auditors and corporate trustees.


North Shore lawyer Andrew Hooker has reviewed the cases of around 160 investors who have lost money in finance companies, and believes at least half of them have grounds for taking action against their financial advisers.

“The scale of advice would go from sound to slightly questionable, to absolutely disgraceful. And there are a significant amount of people in my view at the absolutely disgraceful end.”

Many were put into the same six finance companies – Bridgecorp, Capital + Merchant, OPI Pacific Finance, MFS Boston, St Laurence and Property Finance.

Pay careful attention to Robert Duvall and Sidney Pollack roles in the movie.

Big Franchising

July 18, 2008

Most small business investors define franchising in an inaccurate and childlike way.Everyone knows McDonald’s and that it has made many franchisees millionaires.

McDonald’s is a franchise and so all businesses that are franchised must be a success. Maybe the relationship is not 100% causal but it’s a close relationship. Right?


We Deceive Ourselves: We notice the flashy new sub sandwich shop or the prestigious dog poop scooping service trucks. We always wanted to go out on our own but didn’t want to risk too much. Franchising is pre-sold as a less risky alternative.

We think we might like to look into buying a franchise and this one seems pretty good, so far. Unconsciously we have started down the road in remembering information that would support a yes decision but also ignoring any negative data [confirmation bias].

Humans tend to over-rely on the physical, on what you can see, hear and touch. That evolutionary predisposition has worked well for thousands of years but in a complex, commercial setting spanning international corporations, our “lizard brain” is not too well equipped to deliver a good decision.



Little franchising is what you can see [the branches, leaves of the tree]. Big Franchising is what you can see plus the invisible organizations that feed and nourish the organism [the roots].

  • As the son of a farmer’s daughter, lawn care operator and retired agronomist, I know that 90% of the weight of a plant is underground. The power and danger of franchising is hidden.

Relationship: the first factual error that the power dynamics are simple; that they are limited between the franchisor and the franchisee. The unwary pre-sale or unaware ex-franchisee believe that it is fairly simple David and Goliath story and that this individual franchisor is either a “good guy” or a “bad guy“.

Nothing could be further from the truth.

Public Policy: the true face of Big Franchising is revealed when you watch closely what happens when a law is proposed. Most of the aligned interests prefer the shadows and only come into the light when their favoured positions are threatened.

Big Franchising: Expert specialists

Definition: an informal understanding between legally independent corporations and organizations that serves their mutual commercial, power and political interests.

Members & Role

1. Product franchisors: The Big 3 [Auto, Grocery & Oil] but also very large corporate concerns such as Coca-Cola. Massive, aggressive and willing to get on the phone and bully any politician into the middle of next week.

2. Business-format franchisors: The Blue Chippers [McDonald’s, getting fewer and fewer]. Largely co-ordinated through the national peak trade association [ie. AU National Franchise Association, Kiwi Franchise Association of New Zealand, Canadian Franchise Association or the U.S. International Franchise Association. or their subservient members and the other [usually] 80 to 85% of franchisors who do not belong to the national franchisor association. These are public apologists and training centres for franchisor opportunism.

3. Franchise Bar: The very few large international law firms that have a very lucrative franchise specialty and other boutique practices. A useless law to investors [McLaw} is a great law for The Bar because of the irrelevant, but seriously misleading disclosure documents that need to be written. This is a very protective group of extremely sensitive businesspeople who happen to discuss law in their spare time.

Any lawyer hoping to join the club better play by the rules. Rule Number 1 is serve Big Franchising who arranges to pay 95% of all legal fees. You can usually find the majority of the Franchise bar in the national franchisor association’s membership lists. [Australia, New Zealand, Canada]

Franchisee clients are thought of as a means to pay the rent until you can do some serious billing to the franchisors. When I was in high school, certain girls were considered practice girl friends. I believe I don’t have to go into too much detail here. The high school male and the struggling franchisee lawyer have the same thing in mind.

Each country has a King Rat franchisor lawyer. His job is to discipline the Big Franchising members and instill fear in dissenting opinions. I could name the U.S., Canadian and Oz/Kiwi guys but I promised my wife, no more lawsuits.

4. International peak association: the World Franchise Council is an information sharing project for Big Franchising. It provides training in keeping each nation’s public asleep to the true nature of franchising [higher risk, rent not own business, churning, on and on]. It keeps all their members aware of the defenses available to thie members: The “How-to” of defeating all franchise investors’ claims.

Responds to Oz’s public understanding is a babe in the woods when compared to the U.S. and Canada. The U.K. are still in Big Franchising’s womb, largely because of a very docile business media.

5. Financial Institutions: franchising is extremely lucrative for lenders and financial service providers. National programs are set up that kick back millions of franchisees’ dollars every year to franchisors. Lenders often will disregard the law when they fake their lender’s due diligence duties. They often engage in a cluster of behaviors I have defined as Predatory franchise lending. [Australia, New Zealand, Canada]

6. Product suppliers: franchised businesses are higher margin customers. The franchisor negotiates their kickbacks and the franchisee is forced to pay the inflated price. This is really an undisclosed add-on franchisee fee [often, at least, doubling what you thought you would be paying]. Here is an example: A franchisee paying more for shipping [franchisor] than he did for rent [no head lease].

7. Salespeople: these charming individuals call themeelves consultants, business brokers or researchers. Some even hide behind their PhDs. They steer you to those systems who pay them for for their ability to invoke your trust. Don’t be fooled: Almost 100% of the time, they don’t get paid until you say yes and only from the franchise system that they get paid a commission from. They may charge you a few thousand bucks to find the “right fit” but the real dough will flow when the trap snaps shut [sign the franchise agreement or loan papers]. [Australia, New Zealand, Canada]

8. Media: this is the more subtle one. Experienced journalists know all the sordid details of franchising and have known them for many years. Editors do not publish stories that interfere with the commercial interests of their bosses which are in the same Big Franchising club. Occasionally, stories are published but they are simple open-and-shut cases that would never give the public an idea that the problems are systemic [affecting all parts] rather than individualistic [blame the victim]. The lies the media tell are told in silence.

9. Politicians/Regulators: politics is the brokering of competing interests. Big Franchising represents some of the world’s biggest corporations.

Politicians and regulators know their career is short and corporations’ memories are long. The practice of law has almost entirely been taken over with corporate interests. The widespread use of compulsory private law contract provisions [arbitration and mediation] hides the industry’s abuse.

Franchisees are unorganized mom-and-pop shops, mostly. People that think that even national inquiries will discover the truth and then the truth will will result in a good law [reflects reality] are hopelessly naive about how power works.

10. Miscellaneous: this category includes academics, especially [with some notable Oz exceptions] those pesky consulting fee-dependent business administration professors, Trustees in Bankruptcy, equipment and business appraisers, mediators, arbitrators, non-franchise bar law firms, financial services ombudsmen [apologists for predatory lending practices], national privacy commissioners, law societies [very attentive listeners to large law firms’ economic concerns].

Summary: There exists a complex web of invisible but very real relationships that created, supports and aggressively defends the franchise industry’s dominant power structure [status quo].

  • All things being equal: You may be profitable or achieve your financial goals.
  • But, all things are not equal in franchising, are they?

Ignorance of your potential adversary’s power and influence is no excuse. At least for those with ears to hear.

More garbage info in = better decisions?

July 12, 2008

A good article from the Mr Video situation that illustrates many of the basic problems in franchising, worldwide.

Australia and New Zealand investors and media have really picked up on the industry’s propaganda in the last 12 months or so. As I have increased my knowledge about franchising, the more I want to wash my hands.

Slindile Khanyile reports from South Africa in the Business Report article: Information is franchisees’ best friend in agreement with franchisors.

More is always better?: Partially true in theory but is absolutely misleading in franchise practice. It’s called baffling them with bullshit so the contract is seldom even looked at.

In FranchiseLand, things are often much more complex and counter-intuitive than a “rookie” small business investor would believe. Sheep are useful for both a fine woolen sweater or the barbecue

I would suggest that South Africa’s franchisor-only trade association has some explaining to do. BTW: whenever you see the words “franchising consultant” together, translate that into a commissioned salesperson. You’ll be right 95% of the time.

I took this article into the Information Sharing Project and these are the keywords I extracted:

  • 100 per cent of settlements have gag orders,
  • Access to justice is not available,
  • Apologists,
  • Cannon fodder,
  • Can’t afford to sue,
  • Churning (serial reselling),
  • Complaint letter to franchisors trade association,
  • Designed to fail as franchise investment,
  • Disclosure laws: 10 per cent solution,
  • Disclosure laws: false sense of security,
  • Financial failure of first franchisee a material fact to the second,
  • Franchise laws protect franchisors, not franchisees,
  • Franchise agreements are so complex, they are breached the moment they’re signed
  • Franchise agreements create a License to Lie, Cheat & Steal,
  • Franchise agreements: Masterpieces of deceptive wording and artful omission,
  • Franchisee repudiates loan,
  • Franchisee-on-franchisee opportunism,
  • Franchisor association not trusted by franchisees,
  • Franchisor association not trusted by professional journalists,
  • Franchisors want the minimum regulation they can get away with,
  • Gillian K. Hadfield
  • I own the assets but the franchisor controls them,
  • Incompetent or predatory: for the small business investor, the outcome is the same,
  • Loan repudiation,
  • McLaw: toothless legislation designed to protect the dominant parties,
  • Mediation: information gathering that aids the destruction of valid legal claims,
  • More one-sided information leads to greater deceit,
  • Must sell business (eventually) through franchisor,
  • No franchisor support,
  • Only 3 ways out: resell (next loser), independence (be sued) or abandon (bankruptcy),
  • Opportunism: contract creates powers which are used to strip investor value during relationship,
  • Opportunism: self-interest with deceit,
  • Opportunism Test: If asset ownership were reversed, would decision likely change?,
  • Stores shuttered,
  • System designed to fail for franchisees,
  • Sunk costs: franchisee’s trapped capital keeps them chained to treadmill,
  • Short-term profits to franchisor much higher with cannon fodder investors,
  • Shocked, I tell you: just shocked,
  • Unproven business model,
  • Unsophisticated buyers,

Want to gamble? You better know when you sit down with businesspeople who the chump or the fool is. If you don’t have superior relevant information and power, look for the victim in the mirror.

You may believe you are getting into a sort of a partnership with a franchisor. It is much, much more. You may not care but, believe me, if you ever have to disagree with your franchisor, these parties will create every barrier imaginable to your pathetic attempts at justice.

Usual Suspects

  1. your specific franchisor (good, evil, whenever…),
  2. a national trade association that defends the rights of the best franchisors to behave [if they see fit] as the most predatory [see FASA],
  3. an international network of these apologists & spin doctors (see next logo),
  4. the biggest law firms in the country who are paid 95% by the franchisors to destroy little guys like you [franchise bar],
  5. banks and lenders who love loan pushing, Predatory franchise lending,
  6. franchise consultants/sales agents [only paid when someone says yes],
  7. politicians whose jobs depend on giving the powerful what they want and
  8. monopoly suppliers.

If you don’t understand these issues, you are incompetent to evaluate a franchise offering in any country.

  • You are, however, fully qualified to sign a contract that gives others the right to Lie, Cheat and Steal from you.
  • And you should not be surprised when they, in fact, do so.

Harold Brown, Esq. didn’t call franchising a Trap for the Trusting for nothing.

Confesssions of a former Cat’s-paw

July 9, 2008

I have played several roles within the franchise industry: McD crew & manager, 2x franchisee, media mouthpiece, national franchisee association founder, 2x lawsuit defendant, consultant, lawsuit investigator, researcher, and writer.

The one that I regret the most is that of a cat’s-paw. In my own defense, I was acting with the best of intentions. In hindsight, I was just fooling myself.

  • The only franchise law that will be passed in Oz is one that is bought and paid for by the highest bidder.


cat’s-paw n. a person used as a mere instrument by another

The Canadian Oxford Dictionary, 2001

There are several interests that benefit from the short-term effective awareness-raising [muck raking] that comes from a public inquiry, media coverage and law creation charade.

Opposition politicians: They require sexy issues to criticize the government with and these David v. Goliath stories are quite compelling. Understanding franchising requires a commitment in time and intellectual horsepower that is rare but of a very narrow interest when compared to, say, health care. Most politicians have a short attention span and will move onto the next issue very quickly.

Governing politicians: Modern democracy is the brokering or refereeing of competing interests. Franchisees face the most powerful combined, committed and forceful, international commercial interests that exist anywhere.

Big Franchising =

  • (petroleum + grocery + auto) product franchisors
  • plus the business of law
  • plus financial institutions
  • plus peak association & hangers-on
  • plus suppliers
  • plus media.
  • Governments retain power by giving the powerful what they want.

    Politicians know that they are there for a very short time and they will have to rely on their private sector friends when their public career ends. It is not wise to go against that aligned interest of billions of dollars of capital without some counterbalancing benefit. The appreciation of a few dozen franchise investors not very much incentive to pee in someone’s pool.

    These class of businesspeople are used to getting their own way and they have a very long memory and very deep pockets to sue dissenters.

    • In 1993 the Canadian president of what used to be the world’s largest automobile manufacturer told an Ontario minister: “If you pass a franchise law [in the midst of 1st serious media attention], we will not invest in the province for 5 years.”

    Franchise bar: Franchisors purchase 95% of the legal services. Private action-based disclosure laws increase the aggregate demand for the franchise bar services. An effective franchisee advocate is a useful in creating a bogeyman to further the superior position of the franchise lawyers.

    Ambitious Crusading Lawyer: A franchisee advocate will attract a White Knight attorney who will offer free lunches and free advice. His job is to charm, encourage, prepare and then betray the individual advocate.

    Franchisors: Most mature operators actually use opportunistic behavior very sparingly. They recognize that franchise systems are mini-societies and that making a HUGE example of a wayward franchisee quite infrequently is more efficient and much less risky than taking everyone to the wall 100% of the time.

    • Every McDonald’s franchisee knows what happened to a former operator who didn’t go along with corporate. The sausage-making happens only every 15 to 20 years. The subtle, verbal and private history lessons are usually enough to keep the Yahoos in place.

    But just just so as not to get too rusty, as the Romans proved long ago…there is nothing like a good old-fashioned franchisee advocate crucifixion to keep all hands on the oars. Hope you enjoyed talking to the media…

    Peak association: Finger puppets will do as they are told by their Board’s Himmler. They will be given 100% access to the bureaucracy and politicians while the franchisees will get 0%. The association will be openly, fully and repeated publicly discredited and it will NOT matter one bit. The are messenger boys.

    Media: They are will only go so far in covering abuses. They are large commercial concerns that rely on corporate advertising dollars. They do not scratch the surface and even look for systemic abuse. They only publish the individual, severed head-in-the-hand type of story.


    All of these interested parties know far more about the abuses in franchising that any Johnny-come-lately franchisee advocate could ever know. They’re the insiders for God’s sake.

    • Increasing the Knowledge of industry experts [or talking publicly about it] will never change any Power Dynamics within franchising. [This is the lesson of all social sciences including political science: a discipline started by Stephen Leacock, a CDN BTW.]

    Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has. Margaret Mead

    digital nose-tweakers versus Big Franchising’s table scraps?

    Dance Band on the Titanic

    Litigation Merry go Round

    July 8, 2008

    Another class action lawsuit was filed this week as reported by Richard Gazarik at the Pittsburgh Tribune-Review: Quiznos franchise owners sue sandwich company.


    I took the article into the Information Sharing Project as Record# 1,575. Here is what the Word file looks like before I split it out into the Access database. The present keywords that I extract from the article are here:

    • Bankruptcy
    • Churning (serial reselling)
    • Coupon programs (forced) destroy franchisee margins
    • Discount programs destroy retail margins but boost wholesale profits
    • Encroachment (too many outlets put in territory),
    • Fear of poverty
    • Fear mongering
    • Forced ordering
    • Franchisor overcharges for required products
    • Gouging on supplies
    • Lawsuits just a cost of doing business
    • Lawsuits, class action
    • Must buy entirely useless goods and services
    • Must buy only through franchisor (tied buying)
    • Must pay future royalties, even when the franchise fails (liquidated damages)
    • Racketeering
    • System designed to fail for franchisees
    • Threats of lawsuits
    • Will work even when Variable Costs > than Selling price

    The Future? These are the keywords that will likely fit this situation as it grinds onto the inevitable useless conclusion [if the trajectory does not change]:

    1. Bootstrapping the assets of a corporation
    2. Class-action dead end
    3. Credence good fraudulent expert
    4. Don’t owe your lawyer money
    5. Fee surprises at settlement time
    6. Federal insolvency laws used to shirk legal claims
    7. Franchise agreements create a License to Lie, Cheat & Steal
    8. Financial failure of first franchisee a material fact to the second
    9. Franchisor bankruptcy
    10. Franchisor corporation created to fail
    11. Franchisor insolvency, intentional
    12. Futility of taking legal action
    13. Health consequences
    14. Loan pushing
    15. Piling on: franchisor can afford a few awards but not hundreds
    16. Settlement just covers fees
    17. Sue lender for not doing their lender’s due diligence
    18. Sue the sales agent
    19. System under scrutiny withdraws membership from franchisor association
    20. Trading in false hope
    21. Within the four corners of the contract

    I honestly feel for the operators but fighting this [or any other] franchisor in the Courts is just for fools and their paid cheerleaders.

    Numbers 8, 14, 17 & 18: They hold some real promise as a group action.

    • I wonder why the franchise bar never argues along these lines?

    VetFran: Polishing a Turd

    July 8, 2008

    This colourful phrase was explained to me by my franchise lawyer as such:

    When an attorney has a loser of a case, his job to put it’s best foot forward. Your job is to “polish a turd”.

    All experienced judges, lawyers, even legal secretaries know it is a loser of a case but, hey, that’s the business side of running a law practice.

    In this case, the VetFran program may be used to lure ex-military into a dead franchise industry. For the latest breathless media article see Veterans have edge in franchising effort.

    While I have tremendous respect for the individuals within the military, I not believe success in the military will automatically translate into success within a dying industry. My experience and training would, in fact, predict the very opposite.

    But prudence seldom gets in the way of selling franchises. Let VetFran speak for itself:

    It is because the community of franchising wishes to honor those who have so bravely served our country that a special program called VetFran was created.

    Okay…so this is primarily an humanitarian effort, is it?

    So who are the players in this altruistic initiative?

    • 200 U.S. franchisors (discounts on franchise purchases),
    • International Franchise Association (U.S. franchise trade association),
    • U.S. Department of Veterans Affairs,
    • Veterans Corporation (?), and
    • U.S. Small Business Administration (Hurricane Katrina response).

    Time will tell of course if this is just another way of Trapping the Trusting. Interim proof will be available if many deals fall apart when:

    • the ex-military spouses refuse to co-sign on any franchise debt or contract.

    You’ve earned your meager pensions. Protect your own family as cope with navigating onto civvy street.

    Don’t become trapped in SBA debts pedaled by an industry desperate to replace exiting sharecroppers.

    Franchising’s collapse: Tragedy of the Commons

    July 8, 2008

    The Tragedy of the Commons is an important concept that has very serious implications if you are thinking of buying or continuing to invest in a single-unit (Mom-and-Pop, $ as a high % of total personal net worth) business format franchise.

    • Investing [now] in any franchise is like feeding a corpse.

    Why that is so is a complex question but one that should be asked. Briefly the Tragedy of the Commons is:

    a type of social trap, often economic, that involves a conflict over finite resources between individual interests and the common good. It states that free access and unrestricted demand for a finite resource ultimately structurally dooms the resource through over-exploitation.

    The fastest example would be air pollution. If you think this is just egg-head stuff you run the real risk of being wilfully ignorant with your life savings.

    Such a notion is not merely an abstraction, but its consequences have manifested literally, in such common grounds as Boston Common, where overgrazing required the Common no longer be used as public grazing ground.

    My position is:

    1. the lawyers have been, over time, so good at closing the loopholes that any hope for even legitimate remedy is practically impossible,
    2. the smart money has concluded some time ago that any franchise is too risky (too many types of fatal business risks v. independent businesses), and
    3. the industry becomes increasingly desperate for new sales.

    As more and more people talk openly about their negative franchise experiences, the salesman can only increasingly prey on segments of our society that have not been fraud-proofed. There are no new pastures: they are all Wastelands.

    The industry has, in my opinion, permanently and irrevocably destroyed their own means of survival. Every ecology has its limits.

    • Psychological denial is a cluster of behaviors and emotions that protects people from pain. It is most evident in the irrational outbursts (see shunning of Blue MauMau contributors) of experts with a career tied to the industry. Note: this emotion affects both “good” and “bad” actors [ie. the illusion of legal remedy enables delay of the inevitable burial].

    It is a shame that the franchise bar, franchisors, salespeople, bankers, etc. have invested so heavily personally [education, reputation, status, income, identity] in a dead industry. But it ain’t no Greek tragedy, either as I know the quality of most of these men.

    And it sure as hell needn’t cause you to join in their delusional thinking or fate.

    Oz Alert: Shrewd businessmen immigrating

    May 22, 2008

    If you happen to bump into Bob Bangerter (left) or his fellow Blue Chip founder Mark Bryers (below) say hello for me.

    I take Bob at his word: He is not, as some media outlets portray him, a rich old fiddler.

    As far as the former lawyer Bob Bryers is concerned, a conviction for drunk driving (see Blue Chip’ Bryers blows the bag) and a divorce (see Blue Chip investors’ hopes fade) don’t seem to be slowing him down a bit.

    It appears that Bryers is back in the real estate/franchising saddle but this time working full-time in Sydney, AU after becoming less popular in New Zealand (2,000 unhappy investors, $80-million losses).

    Sydney property investment company Barkley Walsh says it is a subsidiary of ASX-listed Northern Crest Investments. Northern Crest was previously called Blue Chip Financial Solutions and is the parent company of many of the Blue Chip-related companies in liquidation in this country. Trading in its shares has been suspended since February.

    To understand how franchising can be used to market over-priced assets AND dodge tiresome old real estate regulations, I recommend a very instructive article on http://www.stuff.co.nz called The Blue Chip Scandal: the valuations process.

    Perfectly legal, I assure you.

    Meanwhile back at the scene of the non-crime, the NZ Commerce Minister (a lawyer) continues to demean her office by publicly begging bottom-feeding finance companies to not collect on their perfectly legal Blue Chip mortgages.

    This time on national radio.


    1. Businesspeople will do what they can get away with to make a buck. That’s their job. If they don’t, they deserve to be fired.
    2. Everything is legal unless there is a specific statute to say it is illegal.
    3. The politicians’ job is to make sure legislation and enforcement are there so thousands are not impoverished by “aggressive capitalists”.

    Don’t blame a leopard for having spots (see #1), fall for any excuse du jour why laws were castrated (see #2) or be confused as to the duty of this cabinet to its electorate (see #3).

    This isn’t complicated, folks: A franchisor corporation is created. They recruit unsuspecting franchisees who are the only ones legally responsible for selling into a real estate bubble. The franchise system takes in the money and rapidly moves it to a related company. The franchise system (mask) is then killed off to sever legal liability to the principals and the cash.

    SOP (standard operating procedure) in franchising, all around the world.

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