What is the Canadian Franchise Association doing to protect the 1,100 CDN franchisees and 96,000 employees at Tim Hortons?

February 1, 2015

The Canadian Franchise Association says it …advocates on behalf of franchisors and franchisees in Canada

CFA

Tim Hortons is a member of the CFA. The CFA’s Code of Ethics says that their members’ should treat each other with fairness.

Tony Martin former ON MPP and MP made certain recommendations from his experiences during the public hearings which led to Ontario’s 1st franchise law.

News Release
April 4, 2000

Investigate Franchise Association Abuses: Martin

Tony Martin, MPP

Tony Martin, MPP, Sault Ste. Marie
New Democratic Party
News Release
Legislative Assembly of Ontario, Canada

INVESTIGATE FRANCHISE ASSOCIATION ABUSES: MARTIN

TORONTO – The Consumer and Commercial Relations Ministry should investigate the Canadian Franchise Association over its failure to help Ontario franchise holders, NDP MPP Tony Martin said today.

The CFA is advising the Conservative government on proposed changes to provincial laws governing franchise agreements. But the association is under fire from hundreds of its own members for its indifference to their complaints, the NDP Critic for Consumer and Commercial Relations said in the Legislature today.

“The CFA has been of no help to many hundreds of entrepreneurs who lost their shirts in shoddy franchise deals,” Martin said. “Instead of taking the CFA’s advice this government should be sending in ministry staff to thoroughly investigate this association’s failures.”

Martin raised the case of Brenda Hope, a mother of two from Coldwater who lost $90,000 as a Chemwise Inc., franchisee. For more than a year, the CFA has refused to look into Hope’s complaints, although it endorsed Chemwise as a member.

Similarly, the CFA has refused to accept a registered letter from Bulk Barn franchisees who have a series of complaints against the franchisor. Martin was also refused when he tried to deliver the letter. The Sault Ste. Marie MPP called on Consumer and Commercial Affairs minister Bob Runciman to act now to protect small businesspeople.

“Perhaps the minister can convince the CFA to live up to its responsibilities to mediate franchise disputes. If he can’t, we need a full-scale probe of this group. It’s the least we can do for hard-working families who lose everything in dubious franchise deals,” Martin said.

The MPP has proposed his own legislation, Bill 35, that is far tougher than the government’s Bill 33. The Martin Franchise Bill would require full-disclosure of franchise contracts, a dispute resolution mechanism, the right to associate and the freedom to source products outside of the chain when not trademark related.

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Also: Martin’s questions directed to the CFA during their Mar 2000 expert witness testimony.

Source

CFA National Sponsors

 

 


God I am soooo sick of franchisee families’ pathetically, neverendingly bleating about injustice.

June 30, 2013

Moral indignation is a technique used to endow the idiot with dignity.

Mcluhan thug

The latest pathetic example is the entirely predictable Lick’s “fiasco”.

Please: give me a break. Like it hasn’t been  happening for 30, 40 years with the full knowledge of the legal, banking and political communities. Take a look at WikidFranchise.org to hear those inconvenient life stories.

Sure when you lose big-time it hurts. but where were the tears for the thousands of others that went before you?

My experience is that the real reason many franchisees are upset about not being on the power end of the relationship. They got stuck with the shit end of the stick before they could stick the next guy.

And this may sound harsh, but they will double-cross anyone that offers help in good faith.

Drop the scales from your eyes and grow up.

I wouldn’t have seen it if I hadn’t believed it. Marshall McLuhan.


Why is Lick’s Homeburgers & Ice Cream being killed off by its franchisor?

June 29, 2013

What franchisor sends this message to the retail market?

Licks valued customer

Is it in acting in bad faith by destroying all existing Lick’s franchisees’ equity?

  • Who would buy any of these outlets?

Licks

Media coverage:

The franchise bar, with perfect foreknowledge, will take what is left of their money in what will be (in the end) a hopelessly futile attempt at legal justice in Ontario. Talk to your premier and your small business loan provider not your a franchise lawyer.


Quesada Mexican Grill: just another over-hyped franchise pump-and-dump development deal?

April 28, 2013

Let me get this straight: based on 3 years of franchising experience, they’re going to go from 15 to 300 in 5 years? [20 times the size]

Quesada_logo

Franchisors have never been shy about risking other-peoples’-money.

Quesada President Tom O’Neill in QSR magazine called Canadian Mexican Brand Plans to Hit 300 Units in 5 Years:

The company expects to open about 300 franchised restaurants in the next five years. “Our game plan,” says O’Neill, “is to double in
 size every 12 months.”

Double every 12 months? Really? Anybody’s business doubling for 2 years in a row nowadays? And the risk to every franchisee when the franchisor spins out of control?

  • Brutal…all equity gone.

This couldn’t be another pump-and-dump deal that leaves the area developers and their franchisees holding the bag just like Krispy Kreme…Could it? See Burnt to a Crisp on WikidFranchise.org.

Canada Franchise AssociationListing

Quesada Franchising of Canada Corp.
Eat More Burritos
Franchise Fee: $20K
Startup Capital Required: $60K-$75K
Investment Required: $152K-$242K
Available Territories: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island
Training: 2 weeks
Franchise Units Canada: 11
Corporate Units Canada: 4
In Business Since: 2004
Franchising Since: 2010
CFA Member Since: 2010

Source


Opportunity Knocks and Liars’ Loans: required reading to understand modern franchising

September 1, 2012

John Lorinc wrote the book on franchising from a franchisee’s investor viewpoint.

I’m glad to see it is still available to buy online and is in many Canadian libraries.

The hidden banking side is revealed in Chapter 4, The 90% Solution: Franchise Economics, some of which I excerpted in a WikidFranchise.org post.

What did the business press have to say about Lorinc’s work?:

  1. National PostOpportunity Knocks: The Truth about Canada’s Franchise Industry, is an impressively researched look at the myriad of franchises that mushroomed across the country in the past decade. An award-winning magazine journalist, Lorinc has produced an engaging account that charts both the spectacular successes of some franchisers and the utter failure of some franchisees. How franchises seduce those with the most to lose, Jennifer Lanthier, November 2, 1997
  2. Globe and Mail: At its worst, Lorinc says, franchising is a haven for the unscrupulous who prey on the unwary – typically recent immigrants willing to labour long hours in dreary businesses, unaware that those operations have little chance of prospering – using them as pawns in a shadowy real estate game. Rather than reflecting an insatiable consumer demand, he inquires acidly, is it possible that all those new doughnut shops may reflect a quiet understanding between landlords and franchisors that the best way to fill fallow commercial property is to sell franchises to credulous investors? Franchise book of interest to anyone who pays taxes, Ann Finlayson, November 1, 1997

Finlayson strikes a cautionary note, specifically about the hinted at misuse of the Canada Small Business Financing programCSBFP:

Does all this matter to you? Yes, it does. In 1993, in the wake of vigorous complaints by small-business owners that Canadian banks were reluctant to finance them, Ottawa raised the ceiling on loans guaranteed by the Small Business Loans Administration to $250,000 and its guarantee rate from 85 per cent to 90 per cent, sparking a bank lending rush to franchisees and shifting the risk of franchise investments onto taxpayers’ (your) shoulders.

The Risk: Only a fraction of the Liars’ Loans are ever claimed by the banks, thereby grossly understating Industry Canada’s default statistics (Franchised v. Non-Franchised loan performance). The franchisee thinks he signed a government-backed loan but it never gets registered as such. As their bankruptcy, loss of life savings, marital and family breakdown escalate over the life of their 12 to 18 month franchise career, the franchisee NEVER looks to Box 9 of the CSBFP loan application form (Projected Sales ) as the source of their trouble; where the lie is put into the “Liars’ Loan”. The proceeds of these engineered-to-fail loans is split upfront by the franchise banker with the bank, banker, franchisor and sales agent. If questioned, the bank shreds the paperwork and waits for the lawsuit.

And, seriously, how many of these Immigrants as prey losers could or would ever sue a Schedule 1 chartered bank?

The Return: Smashing quarterly earnings goals, record profits, high turnover in the small business division of each of the banks, and making franchise lending the most lucrative form of commercial lending in Canada. Private gain/public loss enabled by a criminogenic environment, moral hazard, regulatory capture…

Lorinc carefully mentions the “windfall profits” in this arrangement of churning:

What’s more, some banks and franchisors have put the SBLA program [predecessor government guaranteed loan program] to questionable use during foreclosure actions against franchisees, says one former owner who has been through the process. When a bank calls a loan against a non-performing franchisee, the 90% guarantee effectively relieves the bank’s receiver from trying to get the best possible value while disposing of the owner’s assets. With most of the loan covered by the Canadian taxpayer, the assets – fixtures, kitchen equipment, inventory, etc. – can be sold quickly at a deep discount, possibly below market value. This allows the franchisor too step in and buy back the property at better-than-firesale prices, thus generating windfall profit when the store is later re-sold to another franchisee.

An important work that, depressingly, is as relevant in 2012 as it was in 1995.

______

Disclosure: My lol pecuniary interest here and here. Cross posted on FranchiseBanker.ca.


Business or real estate brokers’ role in franchising.

August 30, 2012

A clever animation that mentions Subway but is universal.

Spot on for the United States and fundamentally accurate for Canada and any other country.

  • Nice touch mentioning the veterans’ franchise program scams (VetFran).

See Little Caesars: Ist U.S. discount program Imported for Canadian military veteransJanuary 2009 post on FranchiseFool.com.

Cross posted on FranchiseBanker.ca.

 


Simply being exposed to the claim of low risk/high success can influence you to buy a poo-filled franchise

July 26, 2012

Communications designed to persuade mislead and damage you using untruths and half-truths is called propaganda.

Social psychologists define something called priming: unconscious memories influence your behavior. Sometimes fo a very long time. Through repetition (a form of brainwashing).

Franchising trade magazines and trade shows influences potential franchisees to see franchising (in relation to independent business) as lower risk and higher success. Banks write their booklets in a very pro-franchise manner. McDonald’s success and its use as a bell weather (“the McDonald’s of the poo-collection industry”) primes candidates to attribute success where none exists.

Neither of these “truths” is true but that’s irrelevant. By the time the candidate franchisee is looking the low risk/high success bias is part of their DNA. They’ve created a stereotype.

As the scientifically-based research indicates, just looking at words associated with either youth or old age influence how you behave.

What kind of chance do you think you have at a trade show or a franchisor’s open house when every tiny detail is controlled for a positive sales effort? No one’s brain is very good at defending against these extremely powerful persuasion trick and traps. The technology of franchising is the science of neutralizing your defenses and then when the financial loss happens, re-assigning blame from these techniques to you (ie. On Cooling the Mark Out).

BBC Replicates Bargh’s Famous Priming Study at The SituationistJohn Bargh


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