Several thousand, I’d imagine.
- WikiFranchise.org: Immigrants as Prey, Cannon fodder, Language shortcomings create a vulnerability
- Franchising Opportunism, 2005 paper
Canada has a well-earned, international reputation for franchise investors.
Mom-and-pop Tim Hortons franchisee investments:
Weak Ontario franchise law + lapdog CDN insolvency law + predatory franchise lending = Canadian securities regulation weakest link into North American capital markets
The lie in the government guaranteed loan: inflated future sales and 6 times value on assets (leasehold and equipment).
Predatory franchise lending program
Franchising is low-grade entrepreneurial pornography.
Read Franchising Opportunism and you judge. The horrendous losses on unregistered guaranteed government loans are self-financed on inflated appraisals.
A clip joint or fleshpot is an establishment, usually a strip club or entertainment bar, typically one claiming to offer adult entertainment or bottle service, in which customers are tricked into paying money and receive poor goods or services, or none, in return.
Typically, clip joints suggest the possibility of sex, charge excessively high prices for watered-down drinks, and then eject customers when they become unwilling or unable to spend more money. The product or service may be illicit, offering the victim no recourse through official or legal channels. Wikipedia
The process by which banks create money is so simple that the mind is repelled. John Kenneth Galbraith
Each franchisor and franchisee with their own unique ISBN-type number.
Assigned by a private company under contract to the national franchise governing council with a corresponding gmail account accessible by both spouses, held confidentially by this corporation that is enabled legislatively to report to all levels of government. Online registration and due diligence portal protocol funded by franchise bankers (required number to get current account) and sponsored by industry and government authorities. Revenue neutral within 5 years (private or public equity funding?). Mediation intake, processing and reporting. Franchise bar credentialing. Pre-sale education. Industry and legislative program evaluation possible (ie. VetFran and others). Register all confidentiality agreements.
A basis for rational industry growth.
Within reach of any smart phone at pennies per entry.
A good Canadian Press article called Ottawa’s loan program for small business still troubled: report by Dean Beeby.The revenue paid to Industry Canada was supposed to cover the default claims paid out, but the math has never worked in Ottawa’s favour.
Claims paid out have risen steadily over the decade, and now top $100 million annually, while revenues have consistently lagged, costing taxpayers a net $335 million so far.
Put another way, cost recovery is currently at only about 60 per cent rather than the 100 per cent that was planned, and is in steady decline.
“The gap between claims and fee revenues will continue to exist and most likely expand,” predicts the KPMG report, dated Oct. 30 and obtained by The Canadian Press under the Access to Information Act.
The program’s portfolio of loans has become ever more risky over the decade, now catering especially to newly established small firms with weak credit scores and little collateral, many in the food-and-beverage sector.
These loans are used extensively in franchising although the franchise bankers frequently don’t even bother to try to register or make a claim on the phantom loans. The difference between new and used equipment nicely covers the money split between the mob (see here for details).
Program results from 1999 to 2008 using Industry Canada’s own Annual Reports (franchised v. non-franchised loans):
Comparing the years 2008 to 1999:
I’d be happy to send anyone the spreadsheet.
The U.S. Small Business Administration’s 7a. loan program seems to be sticking their citizens with a $70-83-billion public debt, too.
And when I thought I had heard it all and that franchise hustlers would do anything for a sale.
Now word out of Liverpool that their franchisor-only trade association, British Franchise Association, BFA is hard-selling directly to recently laid off UK workers, via their former employers.
It’s like a scene out of the movie, GlenGarry Glen Ross, totally hardcore, old-school boiler room ABCs (always be closing):
We’re adding a little something to this month’s sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize? [Holds up prize] Second prize is a set of steak knives. Third prize is you’re fired.
Lie. Cheat. Steal. All In A Day’s Work. Source
It reminds me of the ambulance-chasing personal injury lawyers forcing their business cards into the hands of people lying in the street from a car accident.
Obviously, what I (or the British public) consider to be ethical business behaviour may not be what the BFA brain trust considers to be fair game. The 2 characteristics of an ideal franchisee are: Did their cheque clear and Can they fog a mirror (alive)?
The story (Franchising could be your next career move) is a little awkwardly worded but these are the most flagrant lies that support this propaganda piece:
All of these assumptions are false and dangerous. The BFA executives are either incompetent or knowingly perpetuating a cruel fraud, this time on the newly laid-off Brits.
I know. I signed my franchise agreement two weeks before my unemployment benefits were to run out in 1992. BTW: an Ontario Justice said in 2000 that I had done the best due diligence she had ever seen but still lost $140,000 in 4 years, being sued, bankruptcy.
Another veteran but anonymous observer, Lionel Hutz PA, picked up the story and wrote about it on Blue MauMau under the following banner, BFA Wants Unemployed to Buy a Franchise. Lionel leads in with:
The British Franchise Association, the counterpart to America’s International Franchise Association, is directly approaching companies that are laying off employees, to persuade those newly unemployed to buy a franchise from one of their franchisor members.
Lionel goes onto say and pose a most relevant question:
Note the false claims that franchised businesses have higher success rates, and the assertion that British Franchise Association members must “meet the strict ethical and business criteria.” I wonder if the BFA has ever expelled a franchisor for bad franchising conduct?
Ray Borradale, a very effective Australian franchisee advocate and mouthpiece chips in with:
AFA, BFA, IFA and FCA read from the same book. This is symptomatic of franchisors; good and bad – and it is dangerous. I note the reference; “educate people about the many benefits of buying into a franchise” with contempt. Where is the education about risk and due diligence? This unbalanced marketing of franchising is not new and BMM has covered many similar stories. It is misleading and deceptive but it appears to be accepted by authorities in every country. [I would add the CFA to Ray’s list of talking heads.]
Remember: Franchising is practiced identically around the world. Some countries know about the dark side of franchising and have developed national spokespeople to combat the propaganda. Some countries (like the U.K.) do not know.
The Australian dream of becoming self-employed can be the path to financial security, but it can also go disastrously wrong.
For years franchising has been viewed as a reliable, somewhat less-risky option for small investors looking to start their own business. But the 500-plus complaints received by the Australian Competition and Consumer Commission every year arising from disputed between franchisees and franchisors show that franchising is often not the easy entry to business that some people think.
In the U.K. there is a greater danger than is faced by franchise investors in Australia. Aus does not have a small business government guaranteed program, but the U.K. does.
Every country gets the type of journalism that it is willing to accept from it’s traditional media outlets. This type of breathless and mindless regurgitating of franchising propaganda is almost never seen in the U.S., Australia or Canada anymore. It was pushed out by volunteer franchisees getting on the back of its nation’s business editors.
Their basic training can begin once they choose to speak out.