Oz FCA franchisor and bank Linked in a Conspiracy?

September 2, 2008

In yesterday’s House of Representatives, Australian member of parliament Joanna Nash (Lib, Gilmore) read the following statement into the record:

In closing I would like to read into the record three succinct extracts from emails in regard to Baker’s Delight, and these can be produced.

The first is from Richard Taylor, Chief Financial Officer of Bakers Delight, to Simon Brookhouse, the Victorian and Tasmanian franchise manager for the ANZ Bank, dated 22 February 2005 in regard to Ms Deanne DeLeeuw who was still an active franchisee at the time. It read:

The South Coast bakeries group heads closer and closer to oblivion.
Is that not evidence that suggests plans had been conspired to terminate Ms DeLeeuw’s franchise well ahead of time?

The second email is from Jurgen Schnabel, Senior Manager of the ANZ Bank, in an email dated 10 March 2005. He wrote:
… we will accept whatever Bakers Delight decides to give us from the sale of Kiama and Vincentia, without question.
Does this not constitute some degree of collusion towards the premature but planned demise of this franchisee?

And finally:
… we have to consider the greater relationship with Bakers Delight given our overall exposure to this group within PM.
That was in an email from Simon Brookhouse of the ANZ Bank dated 10 March 2005. This was when the ANZ agreed to accept a nil return from Bakers Delight for the Shellharbour franchise.

These allegations have not been proven in a court of law.

  • Baker’s Delight is a member of the Franchise Council of Australia, FCA.
  • ANZ Bank is a member of the Franchise Council of Australia, FCA.

There is a very close relationship between franchisors and lending institutions in Canada (see Big Franchising, Red Flags: Predatory franchise lending, Suing a Bank (2)).

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Blocking for the franchise industry

August 26, 2008

As a boy I read a book called Instant Replay by a football player called Jerry Kramer (see #64, left). This is an intelligent look into professional sports by an insider warrior.

Kramer was an offensive lineman with the National Football League‘s (NFL) Green Bay Packers from 1958 to 1968. He won 5 championship titles and 2 Super Bowls, was named to the All-Pro team 5 times and selected as the only guard to the NFL’s 50th Anniversary All-Time team.

This photograph shows Kramer leading fullback Jim Taylor in one of Vince Lombardi’s devastating signature plays called The Packers Sweep:

A sweep is a running play in American Football where the running back takes a pitch or handoff from the quarterback and starts running parallel to the line of scrimmage, allowing for the offensive linemen and fullback to get in front of him to block defenders before he turns upfield. Wikipedia

Until I read Kramer’s book, I did not appreciate the practice, precision, discipline and controlled violence that goes into executing this “ballet of titans”.

The analogy holds for franchising.

  • Business format franchising (visibly manifested as the national trade association) advances their interests using their largely unseen teammates strengths and contributions.
  • Big Franchising steamrollers over their opponents with the finesse, power and drive of a champion football team.

When the public screams get too loud, Big Franchising relies on their friends in the political process to help them. Their “behind-the-scenes” influence is on visible display in Australia and New Zealand now.

You know perfectly well how the play runs.

  • Yes, the spoils accrue to the victor.
  • Yes, the passing of a useless McLaw will be the result.
  • Yes, this will convince some people that franchising is “safe” now.

But you can’t stuff this genie back into the bottle, folks. Too many people have had the experience, they’re learning fast in how to make the links and the internet provides the conduit for accurate risk assessment information sharing.

  • History shows financial bubbles do not slowly deflate: They fly-apart with great violence and with much loss to innocent parties.

Selling Poo-filled franchise systems likely 100% Legal

August 20, 2008

Michael Webster brings up a good point in his article Can You Sell an Unproven System as a Franchise? It is worthwhile looking at Janet Sparks’ original report in Franchising Times.

When discussing a pending Colorado lawsuit, I tend to agree with Michael’s prediction:

I believe that the law in this area will turn out to be, in essence, that you can franchise any piece of poo, as long as you “disclose” in tricky legal fashion that you are a piece of poo.

It is of course a stupid law that would protect investors in franchise systems [franchisors] by allowing any old piece of poo to float through the system – but such is the dedication to the power of disclosure laws, much like the efficient market hypothesis, our regulators and legislature will continue to allow indentured servitude as long as it properly disclosed.

This is the state-of-the-art of legal protection in the home of franchising. And they are very aggressive in advocating for this lack of accountability for franchisors around the world.

Michael again:

I think that Seid‘s position is legally correct, [franchisors have zero duty to provide a proven system] even though both immoral and absurd.

But that is the problem prospective franchisees face – any piece of poo wrapped in a franchise agreement, and FDD can be sold for hundreds of thousands of dollars to the unsuspecting public who believe that they are buying a “proven” system.

Disclosing you are a worthless piece of poo is all the protection that Big Franchising is willing to give you.

Go ahead and choose your Type of modern franchise [see Bristol Stool Chart, above]. Or…

  • For Mom and Pops, Franchising is Unsafe at any Brand.

If you knew how to separate the pepper from the fly poo, you’d start your own business and not share an industry rife with “proven” psychopaths. [social predators: lack of conscience & empathy, glib, bullying, violence]


Why is Oz investigating franchising?

July 19, 2008

Seems like a stupid question with a profoundly dead-nuts simple answer: Because franchisors are black-hearted bastards willing to pry the last nickel from a dying widow’s hand.

Okay.

But let’s hold our perfectly understandable emotions for a moment. I’ve had that response but have worked my way through that.

A few questions, though

  1. Do you think franchisor alone are smart enough to put together such a sophisticated, all-at-once machine?
  2. Do you think your national banker or lawyer is any less ruthless in getting their way, when push comes to shove?
  • Or, maybe, part of the franchisors’ role is to be a scapegoat for the real but hidden economic powers?

I’m pressed for time right now so I will be coming back to this topic but let me throw out an idea or two as I snatch a few moments away from moving my son back to university for the fall.

I think:

1. Oz politicians mean to investigate “franchising” really mean looking into little franchising [and not Big Franchising]. They want a superficial look a the visible fall guys instead of a systematic inquiry into the complex commercial arrangements I have defined. They only want bewildered, traumatized franchisees asking naive questions about things they will fake ignorance of. The politicians know all about franchising’s unfairness: this is a PR stunt to create another useless oversight process that will keep the abuses off the front pag

2. The real strength of modern franchising is in the Franchise Bar. Let’s call Oz’s King Rat lawyer and make him answer questions. These litigators do not like being asked questions by a well-prepared politician [assisted by a smart, good looking franchisee advocate]. See here the 2000 testimony from the Canadian Bar Association – Ontario.

3. Big Franchising is all about wealth re-distribution. The bankers and lenders are professionals with a statutory duty because lending is a credence good. They are a self-regulated industry whose lap-dog regulators run a dog and pony show of trapping and defeating complaints, How about inviting 3 or 4 of the franchise bankers to explain specific franchisee loans and patterns as they contrast to what I have seen in Canada.

  • Sure, the bank robbers are a nasty bunch. Guaranteed
  • But who exactly is driving the getaway car? [that’s franchising’s strength and its greatest weakness: its Achilles’ Heel]

If you want a solution, follow the money.

If you want to float down Big Franchising’s river, do as you’re told, talk your brains out and be happy with what they give you.

  • You are being played like a violin [again]. Wake up for God’s sake.

Anyone with any imagination can see this and knows the only rational response to this facade is to:

  • create a digital Big Franchising kangaroo Court with rules designed to broaden the inquiry .

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