Repetition does not transform a lie into the truth.

August 13, 2008

In a previous post entitled United Kingdom franchise media: What soap?, I took exception with an article that appeared in the Eastern Daily Press called Flourishing franchises buck trend.

It riled me so much that I fired off an email questioning the credibility of the sources (franchise banker, British Franchise Association, consultant/salesman, etc.).

Perpetuating the falsehood (franchises survive longer and are more profitable than independent businesses) is dangerous. This specific misrepresentation was exploded due to the academic work of Timothy Bates and Scott Shane some 10 years ago. No credible scholar would make these statements.

Bob Purvin’s recently re-issued book The Franchise Fraud [Amazon reviews] directly addresses this distortion also.

There probably is no specific quality franchise research having to do with U.K. franchisee survivability. There isn’t any in Canada, Oz or New Zealand either. The only work credible work is from the U.S. but that’s okay: That is where franchising is created and exported.

I promised to report back if the deputy editor, Adam Aiken, contacted me. This is my sixth email I have sent to other UK business media asking them to stop simply re-typing the franchise industry’s always rosy media releases. All of the these have been ignored

To Adam’s credit, he actually wrote back and this is what he emailed me:

Thanks for this, Les.

I’ll include some of your comments on our new business blog and provide a link to your blog, if you’re interested . . .

Adam

I accepted his offer and thanked him as any polite Canadian would do in the situation.

Title courtesy of Franklin Delano Roosevelt.

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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


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