Franchisee commissioner to be appointed in South Australia

October 4, 2010

A bright idea from down under.


Small Business Minister Tom Koutsantonis explains about this initiative in this audio interview.

Summary:

  • franchisees terrified of speaking on the record,
  • how many problems?: “hundreds of complaints”,
  • churning: serial reselling, gouging on supplies,
  • South Australia is largest Australian small business state (+150,000),
  • Commissioner has authority to mediate between franchisee and franchisor, and
  • authority to report to Courts if one party refuses mediation.

News coverage:

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Shocking franchisors into good behavior

December 29, 2008

cattleprod

People tend to behave better when the costs of misbehaving are increased.

As reported at Blue MauMau on December 28th, Bakers Delight is planning to sell more stores in the face of massive controversy (Bakers Delight Plans 150 New Franchises).

To wit:

Entangled in 2008 with government hearings over unfair franchise practices, franchise owner litigation, rumors of financial problems and the recent failure of its attempt to enter the U.S. market, Baker’s Delight remains undaunted. The Australia-based firm announced today that it plans to sell 150 new franchises in Australia, New Zealand and Canada. The statement did not specify when it plans to achieve this.

A well-known Australian franchise windmill tilter, Ray Borradale adds to the posting:

This would explain why the anti-Bakers Delight franchising website [www.bakersdelightlies.com] was purchased from the ex-franchisee who assisted to expose the reality of franchisor behavior and franchisee failures and did enormous damage to the brand.

Mr. Borradale goes on to make an offer that most unsettled former franchisees might want to consider:

I would suggest Roger Gillespie [BD’s CEO] doesn’t appreciate that the removal of that web site will do little to find him all his new franchisees; rather, it will increase efforts to ensure he continues to have major obsticles to contend with.  Roger is kidding himself.

He should learn from Midas; it don’t go on for ever baby. How many web sites does he want to buy?  Perhaps ex-BD franchisees can get their money back from Roger through a new entrepreneurial effort setting up sites and selling them back to him at $200k a pop?

Any BD people can contact me if they want some assistance.  It takes a huge effort for 24 hours and then a lot of money; less than $200 will get you started. [my emphasis]

An interesting idea: a few (dozens?) of websites and blogs, each watching, collecting documents and recording a specific franchisor’s every move. Providing and sharing information based on the [almost] no cost of the internet.

Using the network effect of the internet to short-circuit opportunism via former franchisees who are out to make a buck.

  • Private law ordering or digital vigilantism [depends on your viewpoint].
  • Hundreds of copy-cat anti-this trademark system, anti-that trademark systems?
  • Standardized indexing of a www web of national trademark nodes?
  • Organizing to defuse a type of organized crime [but on an electrical platform unlike the law which is strictly lead type].

Reflecting franchising’s unique strength (duplicatabiliy) onto a technology that can condition franchisors into good behavior [operant conditioning: voluntary fair dealings at the end of a cattle prod]. Interesting.

  • But, my God, where will it end? With just one AUS franchisor?

Maybe yes. Maybe no. The new year promises to be very interesting.

PS: This is a secret so don’t tell anyone. Homework: Start collecting everyone’s home email for future bulk emails.


United Kingdom franchise media: What soap?

August 8, 2008

UK journalists are still a lapdog when it comes to franchising.

Whenever I read the regurgitated franchisor press releases routed through the Kiwi-based Franchise-Chat.com, I want to retch. You seldom see such drivel ever making it past any self-respecting business editor in North America.

  • Kudos to the Oz and NZ rodeo clowns for wising your media to the International Brotherhood of FWW-FIBS [Franchisor Wankers Waiting for Franchise Investors to Bend down for the Soap]

A good example is the breathlessly titled: Flourishing franchises buck trend that was published by Adam Aiken at the Eastern Daily Press.

These “facts” are given to us by Natwest Bank and the British Franchise Association survey while some consultant [read: salesman] named Roy Seaman of Franchise Development Services says:

  • only 5% of franchises fail when
  • 65% of non-franchised small businesses fail.

Bullshit. Bullshit. And then more bullshit.

Please find below my very restrained email to Mr. Adam Aiken, Deputy Business Editor.

No response yet but I promise to report back, if they bother to wake up.

Date: Wed, 6 Aug 2008 21:30:13 -0400 (EDT)
From: “Les Stewart” <xxx.com>
Subject: Flourishing franchises buck trend
To: “Adam Aiken” <adam.aiken@archant.co.uk>

Adam,

I would question the credibility of the survivability of franchised versus non-franchised businesses. The North American franchise industry was well-known for bragging of such lower risks than independent businesses but was subsequently proven dead wrong by academics such as Timothy Bates, Gillian K. Hadfield and Scott Shane.

Knowledgeable scholars who study franchising issues routinely express contempt for the failure rate statistics publicized by franchisors. Francine Lafontaine, for example, states ‘one of the major selling points of franchising to franchisees over the years has been the statistics vehiculated by the trade press on the very low failure rates of franchised businesses compared to independent operations. These statistics never had real scientific basis’ (p. 14, 1994). Such criticism does not deter the industry.

Survival Patterns among Franchisee and Nonfranchised firms started in 1986 and 1987, U.S. Department of Commerce, p. 6.

The information that is in article, in my opinion, is seriously misleading to potential small business investors. I suspect an Australian site [BakersDelightLies.com] is more representative of UK investors’ experience rather than one-sided franchisor-only hyperbole.

If you’d like to take a look, I think my weblog and the U.S. Blue MauMau community provides a more independent view.

Les Stewart MBA
Midhurst, Canada
lesstewart.wordpress.com


Oz national Franchise Inquiry

July 7, 2008

Deanne de Leeuw has been a very effective advocate for the problems that afflict Australian franchise investors. Her efforts should be commended and supported by everyone because franchise law is truly an international affair.

Similarly, BakersDelightLies.com deserves everyone’s appreciation, as well. Without focusing efforts and co-operating, franchisees will never be able to utilize the information that is available which can be used to counteract the overwhelming economic advantage of the adversary.

God is not on the side of the big battalions, but on the side of the best shot. Voltaire.

Blue MauMau is an important resource for those wishing to increase their knowledge about franchising. Deanne posts there to keep North American readers informed. I would encourage every national group to do this. If you want help, talk to those who have decades of experience.

The national inquiry notice was posted on Blue MauMau recently: Australian Government Announces Inquiry into Franchising. This is the entire posting.

On 25 June 2008 the Australian Federal Parliament Joint Standing Committee on Corporations and Financial Services resolved to inquire into the Franchising Code of Conduct and related matters.

This follows the recent State inquiries held in Western Australia and South Australia.

The terms of reference are:

The Committee is to inquire and report on the operation of the Franchising Code of Conduct, and to identify, where justified, improvements to the Code, with particular reference to:

1. the nature of the franchising industry, including the rights of both franchisors and franchisees;

2. whether an obligation for franchisors, franchisees and prospective franchisees to act in good faith should be explicitly incorporated into the Code (having regard to its presence as an element in paragraph 51AC(4)(k) of the Trade Practices Act 1974);

3. interaction between the Code and Part IVA and Part V Division 1 of the Trade Practices Act 1974, particularly with regard to the obligations in section 51AC of the Act;

4. the operation of the dispute resolution provisions under Part 4 of the Code; and

5. any other related matters.

The Committee invites submissions by 12 September 2008. The Committee will report by 1 December 2008.

Please send submissions to corporations.joint@aph.gov.au or by post to –

Committee Secretary
Parliamentary Joint Committee on Corporations and Financial Services Department of the Senate
PO Box 6100 Parliament House
Canberra ACT 2600

Emailed submissions should include full name, address and phone contact details so that they can be verified.

For further information please contact the committee secretary on (Australia) 02 6277 3583 or at corporations.joint@aph.gov.au

Oz McLaw is important because this is the first national legislative push since the formation of the Blue MauMau Web 2.0 community. The world’s resource [both sides] will be looking down under and applying whatever pressure they can to forward their interests.

Political Childlike Thinking: Some people believe that simply telling their story on paper or in person to a politician is enough to get an effective law [ie. a lack of knowledge is the problem and the truth will, by itself, win out]

  • It isn’t. It never has been. And it never will be where modern politics is a brokering of competing interests.

The disciplines of social science such as political science and law are about power as much as physics is about numbers.

Politicians and regulators know infinitely more than you know and will still do nothing, even after the blood runs out of the media reports. 40 years of North American experience proves it. Trying to shame or out-muscle Big Franchising is a fool’s game.

Better Risk Assessment: The solution is the development of an educational tool that would digitize the knowledge of a 20-year franchise law expert inside an expert system software program.

The reaction of the franchise bar proves that this approach will solve the abuses by accurately showing the breadth and depth of business risks of investing in a franchise.

If the risks were accurately revealed to you before you signed:

Who but a fool would sign a contract that gives the franchisor a License to Lie, Cheat & Steal ?

Benefit: Over 1,500 documents [so far], from around the world which have been indexed to teach. A franchising Google.

Cost: Free to anyone who wants it.

Interested? Give me your physical address and I’ll mail you a CD with the Access 2000 file [30 mb]. Want to write some code to take this onto the web for everyone?: drop me a line. Let’s Wiki.


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