Eggspectation: Cracks in U.S. expansion dreams?

December 17, 2008

eggslowSean Kelly over at FranchisePick has a great article (Low Eggspectations: How NOT to Handle a Franchise Dispute) about the Montreal, Canada Eggspectation franchisee that had his store dumped out onto the street last week.

They are very relevant to all franchisors and investors at all levels in North America:

Publicly dumping the franchise restaurant contents on the sidewalk for the city’s garbage cops to deal with was the ONLY option CEO [Enzo] Renda could come up with? [Sean’s emphasis]

Navigating a franchise dispute is extraordinarily difficult and requires leadership skills that this franchisor clearly does not possess.  A franchisor CEO must be able to justify to other franchise owners, stakeholders, employees and sometimes customers that the harsh action they must sometimes take is necessary in order to protect the brand image that is their greatest asset.

In this case, Renda likely caused more embarrassment to the chain and damage to the Eggspectation brand than his errant franchisee ever could have.

Not eggsactly eggstraordinary brand strategy for a company that hopes to open 70 units in the U.S.

I agree. It takes skill, patience and maturity to operate a stable, let alone grow a franchise system internationally.

The comments are interesting. They include a Montreal Eggspectation franchisee named Paul Plaitias coming to the franchisor’s defense. How unusual.

When there is a CANCER [presumably the exiting franchisee] in your system your only goal is to remove it as quikly (sic)as possible before it spreads.
This was the only way that the Franchisor was able to protect all of his Franchisees.

JIMMY SKINDILIAS!! [franchisors]

From Paul Plaitis
For Eggspectation Complex Desjarsdin

I have differentiated between House Slave and Field Slave in a previous post called  House Slaves in Franchising and put it into cultural norms within Silencing Dissent via Humiliation. Time will tell if Mr. Plaitis is playing the role of House negro while the exiting franchisee is a little bit more of the field variety.

  • Carol Cross’s view is more than warranted when viewing franchising.

However, two other media outlets weighed in (so far):

1. The Montreal Gazette :: Bailiff gets cracking, shuts Eggspectation by Jan Ravensbergen. The exiting franchisee’s name is Newton Bastiampillai and it appears Joseph Ionata is his lawyer. Billy Katelanos (Gowling?) seems to be the franchisor’s lawyer.

2. The Toronto Star (Canada’s largest daily newspaper) :: Eatery spills out into Montreal street
Contents of failed diner tossed onto sidewalk; booze, other items taken before police arrive

Thanks for the graphic Sean.

Silencing dissent via Humiliation

December 1, 2008


When you are a franchisee, you quickly learn what is and is not allowed to be said in public.

It goes like this, you can talk publicly:

  • 1,000 hours about increasing your sales but
  • 0 hours about how to increase your profits.

Those are the basic rules (norms, standards) of every trademark system that I have known.

These cultrual values are expressed during the regional and national meetings. This is what the meetings are principally for: the reinforcement cultural values within a group via a type of public demonstration or play.

Franchisors are very attuned to attitudes of dissent. They separate franchisor-friendly behavior which is rewarded and detect of franchisor-unfriendly attitudes and behavior which is punished.

  • They teach the new franchisees what is and is not to be said and done.
  • They encourage mentorship of new franchisees from someone who is “on the team”

One of the ways of showing the master’s pleasure is through the always-present Awards Ceremony. Such juvenile awards such as “Top Franchisee” or “Best Team Player, 2008” are handed out with the obligatory publication of the “grip and grin” photos. No speeches are allowed, however, unless the franchisee is one of the “anointed few: the royal priesthood, a franchisee set apart” (ie. a franchisee who is so deeply co-operative as to be a virtual extension of the current franchisor). These are baubles bestowed upon franchisees who are “on the team” (ie. acting as a franchisor collaborator).

It was no mistake that McDonald’s Canada rewarded the southwestern Ontario franchisee who was the token franchisee on the government-lead Franchise Sector Working Team. Within a month of the law being passed (the law was pushed by franchisors, not franchisees), this four-store operator won a major award: an important symbol to the hundreds of Canadian McD operators of how to properly lick the hand.

  • This franchisee’s policy competence was such that he went out into the hall to call his master whenever a thorny issue like “good faith” was brought up: he needed to hear his masters voice so he could parrot it in the meeting. This behavior was well-known.

It is very frequent that a hopelessly-compromised, compliant franchisee is forwarded as a spokesperson when a law is being proposed. this is where the term “House Slave” comes from: a, by comparison, a well-treated slave that protects his master’s interest, especially against the lower status slaves: the field slaves.

Humiliation is the usual punishment breaching the culture of franchising. The franchisee is felt to be alone (“Funny: You’re the only one who has mentioned this problem.”), the cause of the problem, lazy, overly critical and stupid.

  • To mortify someone is to make them feel deep shame for their beliefs or actions. New franchisees go through a type of “boot camp” (initial training) where their hours of work, dress, key personal relationships, etc. are all changed to fit the new, subservient identity called: a franchisee.

Shame corrodes everyone’s self-view as an autonomous adult. It decreases the person’s ability to resist authority.

The Courts: Guilt by Association This is the role of the Courts play in franchising since the Courts hold a monopoly on the coercive enforcement of the law in our society. Franchisees, lacking the conceptual and educational prerequisites to defend themselves, recoil reflexively at the thought of a lawsuit because they believe that only the guilty are ever sued.

  • The Court’s important and rightful cultural equity (respect for the law) is effectively high-jacked for the purely for the franchisor’s commercial self-interest. Since 95% of legal fees are paid by franchisors, their viewpoint is grossly overly represented (reinforcing the belief that “the Courts” are unfriendly to franchisees).
  • Based on a simple % of lawyers, a franchisee will always NEVER have a case to pursue.
  • The cost of litigation means even the most severe abuses are routinely never litigated.

No wonder I keep getting encouragement to keep writing via minor Ontario court officials: Justices do not like the law being used as a commercial intimidation tool.

  • Modern franchising mocks the law (only the rich can even hope to win) and in that way, is fundamentally anti-democratic.

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