Piling on: The Risk of me too claims

September 30, 2008

Piling on is a concept that most franchise investors do not understand.

Their ignorance is a very serious hazard because the risk of “copy cat” claims is a HUGE problem for their franchisors.

They can lose everything if franchisors lose control of the 1st serious challenge to their 100% absolute authority.

In American football piling on is an illegal play when defenders jump on the ball carrier after he has been tackled.

  • In franchising, any franchisor can settle the 1st very legitimate claim. But no franchisor can afford to settle, say, 100 similar claims (franchisees 1 to 100).

If one franchisee is successful in proving some wrongdoing, then the franchisor is exposed for ALL his franchise relationships.

Franchisees often wonder: What the hell…Why the thermonuclear war when I’m just asking a few simple question? I’m being reasonable; why isn’t he? (Think about it from the franchisor’s side: See his smile as he writes 100 cheques?)

Note also that the specific wrongdoing that you bring forward (ie. false earnings claims, supply gouging, ad fund use, etc.) doesn’t really matter. Experienced franchisors know that much more serious claims are there IF you know where to look.

This is why, when you continue to disagree with your franchisor, it should not be a surprise when these things happen:

  • delay, deny and then delay some more (Gosh, Les. You’re the first franchisee who has said anything about this issue.),
  • progressive discipline: start with verbal and then written threats; self and then lawyer; general (read: cheaper) and then franchise lawyer,
  • willing to spend $50,000 in legal fees to settle a $5,000 single bullshit issue,
  • refuse your expansion, renewal of franchise contract or withhold permission for any sale of your franchise,
  • tell all franchisees that it would be commercially “unwise” to associate with you,
  • re-write franchisee meeting minutes,
  • rig elections, threaten spouse, activate proprietary sabotaged software,
  • have your banker freeze your current account,
  • be short- or force-shipped, put on COD, given tampered goods, etc. by the authorized single supplier,
  • when you go to the industry association’s ombudsman program, all the information you tells them goes directly to the franchisor and his lawyer,
  • every cop and regulator says “no thanks” but says you can sue them,
  • talk to the media (a sure way to hasten your demise),
  • talk to a politician (if more than 4 years experience, he’ll act shocked but will privately know all about Big Franchising‘s power: older politicians and party officials have had “the money/influence talk” with him),
  • insist on life-long confidentiality agreements (self, spouse, descendants) to get 15% of your investment “back”, and
  • intimidate franchisees like hell to avoid having a skilled franchise lawyer meet regularly with many franchisees to discuss their legal options.

Every franchise investor must know this [going] in. If you don’t want the fraud sausage to blow:

  • never question the divine right of your betters,
  • keep writing the cheques and
  • relax, breathe and learn your new identity well; as a shill for your master.

Question any little thing and it’s Nagasaki time.

Homicidal McTurkey spotted in AUS

September 16, 2008

“Let’s not let turkeys kill the goose that laid the golden eggs.”

An interesting quote from John O’Brien, Chairman of the Franchise Council of Australia, NFC in a Smart Company article called: Franchise Council hits back at critics.

It seems Australia’s democratic process (ie. citizens speaking to politicians, members’ raising constituents’ concerns within parliament, Hansard records, governments asking House/Senate committees to look into areas of potential legislation, Joint Committees asking for citizens to contribute, yaddayaddayadda) has AUS franchise industry’s self-proclaimed “peak body”, a little miffed:

The Franchise Council of Australia has urged members to “push back” against claims of franchisor abuse aired in Federal Parliament last week.

A number of MPs, including NSW member Joanna Gash, told Parliament last week of allegations of churning, bullying and intimidation by franchisors. On top of this, a Federal Parliamentary inquiry into franchising was flooded by submissions from disgruntled franchisees.

It appears that Mr. O’Brien is sensitive to any lack of confidence in Australia’s franchise industry:

“If you are as annoyed as I am at these continuing smears against franchising, I urge you to email or write to the committee handling the inquiry right away,” he writes.

“Let’s not let turkeys kill the goose that laid the golden eggs.”

It was unclear to me who Mr. O’Brien was calling a turkey (bird brain?). Each or all of the following:

  1. Mrs. Joanna Gash MP, (duly elected in 1996 then re-elected in 1998, 2001, 2004 and 2007 by the fine people of the Electoral Division, Gilmore NSW),
  2. the other 7 MPs who have joined her in demanding immediate parliamentary action to curb franchisor opportunism (see Franchising at a crossroads),
  3. the Parliamentary Joint Committee on Corporations and Financial Services or
  4. the clearly diabolically obsessed mastermind, the thuggish: Deanne de Leeuw.

In any case, Big Franchising is always more than willing to “hit back” to get their way.

  • As any good fascist knows, democracy is the last refuge for losers.

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