The Canadian Alliance of Franchise Operators, CAFO

November 26, 2014

We created CAFO in 1998 to give voice to “mom-and-pop” franchise operators.

cafo_smvlogo

We were the 1st association in Canada to improve the commercial interests of 76,000 franchise families because:

  • there was no Ontario law,
  • there was no one for journalists to talk to,
  • there was no one for politicians to learn from,
  • there was no FranchiseFool.com and WikiFranchise.org, or and
  • there was nothing to protect the “little guys”.

And more importantly, there was no where for franchisees to talk confidentially with someone they could trust.

In 2014, heading into the 15th anniversary of the Arthur Wishart Act (Franchise Disclosure), there are a lot of alternatives if franchisees wish to use them. (call: 705-737-4635)

This is one of the first articles (Sept 1998) in the Toronto Star called, Franchisees need fair-deal law:

LesStewartFRANCHISEE FIGHTER: Former franchisee Les Stewart has taken up the cause of franchisees.

WHAT PROTECTS A SMALL FRANCHISEE IN ONTARIO AGAINST UNFAIR DEALING BY THE FRANCHISOR CONTROLLING THE SYSTEM?

We asked Les Stewart, a landscaping supplies retailer in Barrie and a former franchisee and founder of the fledgling Canadian Association of Franchise Operators. (second of two parts)

Franchising is a $100 billion sector and a powerful concept of business organization. Many of Canada’s 76,000 franchise operators make a good buck.

But others, like Stewart, an MBA from the University of Western Ontario in London, have sad stories about being put into failing situations by deceptive franchisors, stripped of their savings and crushed by the costs of litigation in Ontario’s totally unregulated franchising regime.

Everyone warns prospective franchisees to investigate before investing, but exactly how are they supposed to check out the records of the 1,350 franchisors who want to sell them a business? Which are exemplary, which have reasonable standards of conduct, and which are practicing legalized fraud?

The best approach is to talk to franchisees in the system to find out whether head office delivers the business training and support it promises, and respects the commercial territories it purports to sell.

Unfortunately, there is no efficient way to identify and then locate those who have the most interesting tale to tell – the franchisees who failed. How many of these unfortunates have been spat out by each franchise system, who are they and why did they sell or go under?

Most U.S. states addressed this question with law decades ago, and Alberta adopted a similar standard in the 1990s. They require public disclosure of contract terms and verifiable disclosure of franchisee experience.

The laws cover all franchisors from mighty McDonald’s and across a business gamut that includes, among many others, such familiar names as Coffee Time, Mr. Sub, Mr. Lube, Giant Tiger, Mail Boxes Etc., First Choice Haircutters, Medichair, M&M Meat, Kiddie Kobbler, One Hour Motophoto, Ramada, Rent-a-Wreck, Ryan’s Quality Pet Foods, Shred-It, Servicemaster Lawn Care and about 1,340 others.

Ontario should have the disclosure Alberta has – and more, Stewart says. The law should allow franchisees to associate without fear of reprisal, and fact-finding to resolve disputes or affordable compulsory arbitration.

Any franchisee can go to court, says Stewart, but it’s no fun playing David to a franchisor’s Goliath in long and costly civil proceedings.

In Ontario, the Harris government’s draft legislation does not provide for a central registry of franchisor disclosures, and requires only that disclosure be made to a franchisee prospect before a contract is signed.

That’s essentially worthless, says Stewart. He says Queen’s Park should recognize franchising as an important function like banking or securities trading.

mike bear-webA little older with a unique background to bring to the table.

Still willing to talk to franchisees and their families.

Les Stewart Consulting: les.j.stewart@gmail.com

Advertisements

Colonel Sanders is a greeny, lying son-of-a-bitch

December 24, 2010

The public thinks so ’cause there’s not one proven truthful person working with the  culture jammers.

The KFC franchisor team and franchisee independent association should agree on this:

  • we need to protect our shared asset: the brand

This is why Les Stewart Consulting and friends exists: to provide a credible, pragmatic, independent third party to “work things out”.

Don’t trust me. Why not ask Seth if advisor reputation, industry credibility and a track record of resistance to abusive practices, means anything to the general public.

It’s not needing a thief to catch a thief: It’s just learning smart digital business practices from the kids in the hall and a few of Julian‘s buddies. Otherwise, it’s just put-your-hand-in-front-of-the-cam-corder-at-your-local-KFC YouTube time.

[KentuckyFriedForests.com, DogwoodAlliance.org, WikiFranchise.org]


Bothams WA Inquiry Sees no Evil…

April 30, 2008

Chris Bothams released his final report this week entitled: “Inquiry into the Operation of Franchise Businesses in Western Australia”.

You judge for yourself: How close to your experience is it? (free download).

Pro:

  1. a national franchisor registration would be nice (including the sunk cost-captured franchisees, of course), and
  2. make proposed government-submitted disclosure documents accessible on the internet (just like Caleasi in California is now).

Con:

  1. it is +30 years behind the times,
  2. potentially misleading, and
  3. mostly irrelevant.

As far as intellectual rigour goes, let’s compare Botham’s report to a Canadian report. In 1971 Samuel Grange who retired as an Ontario Appeal Court justice, said this about franchising:

Throughout the evidence it was a recurring complaint that the franchisee is constantly plagued with the threat of termination of the franchise…

Further…

…the franchisee has invariably invested time and money, and he knows that he will lose it all if the franchise comes to an end. Naturally, he is prepared to be servile, and if not, he is generally not long for the franchise family. p. 40 [my emphasis] [Grange Report full monty]

Unlike Mr. Bothams, Grange did his insightful work without the benefit of reading Gillian K. Hadfield’s work, especially Problematic Relations: Franchising and Law of Incomplete Contracts [BTW: 49 of the most important pages ever written about franchising].

Mr. Bothams ignores the unique vulnerability that franchise investors suffer from (vis-a-vis independent business):

Franchisees own the unit’s assets but their life savings are controlled by someone else (the franchisor).

This ownership/control separation is makes the relationship totally unique.

The franchisor can further use their 101 discretionary powers to further strip time and money from the investor during the course of their relationship.

To mention only once and in an extremely narrow reference, the central fact of franchisor opportunism, suggest the inherent bias of this report.

My Contributions: Please also note on page 68 (Appendix 3: List of Submissions), Number 2: Les Stewart Consulting. That’s me. For what it is worth, I sent the most current, internationally recognized academic research to Mr. Bothams’s office.

This report goes out under his signature to Minister Margaret Quirk. My guess it will quickly sink out of sight.


%d bloggers like this: