Simply being exposed to the claim of low risk/high success can influence you to buy a poo-filled franchise

July 26, 2012

Communications designed to persuade mislead and damage you using untruths and half-truths is called propaganda.

Social psychologists define something called priming: unconscious memories influence your behavior. Sometimes fo a very long time. Through repetition (a form of brainwashing).

Franchising trade magazines and trade shows influences potential franchisees to see franchising (in relation to independent business) as lower risk and higher success. Banks write their booklets in a very pro-franchise manner. McDonald’s success and its use as a bell weather (“the McDonald’s of the poo-collection industry”) primes candidates to attribute success where none exists.

Neither of these “truths” is true but that’s irrelevant. By the time the candidate franchisee is looking the low risk/high success bias is part of their DNA. They’ve created a stereotype.

As the scientifically-based research indicates, just looking at words associated with either youth or old age influence how you behave.

What kind of chance do you think you have at a trade show or a franchisor’s open house when every tiny detail is controlled for a positive sales effort? No one’s brain is very good at defending against these extremely powerful persuasion trick and traps. The technology of franchising is the science of neutralizing your defenses and then when the financial loss happens, re-assigning blame from these techniques to you (ie. On Cooling the Mark Out).

BBC Replicates Bargh’s Famous Priming Study at The SituationistJohn Bargh

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Mr. Clean Car Wash: Poo-filled franchise systems will Not do

February 11, 2009

mrcleanRichard Solomon hit this nail right on the head, I think.

Jim Amos and Procter & Gamble put their heads together to make the Mr. Clean Car Wash franchisee.

Solomon calls it a FranWhack: an “investment” that will inevitably fail for the franchisee:

Not even the best cleaners and polishes put out by P&G can possibly spit shine this turd.

The economics of this carwash concept don’t compute, and the choice of franchise leadership is dreadful.

P&G has given birth to a FranWhack here. No one in his right mind should ever consider investing in this debacle in the making.

Everyone should follow these two threads over at Blue MauMau as the pundits ridicule this latest, Is-this-the-best-they-can-do franchise offering.

  1. Controversial Amos Leads P&G to Launch Mr. Clean Car Wash Franchise Nationwide, Don Sniegowski
  2. Can Proctor & Gamble Succeed with Jim Amos at the Helm?, W. Michael Garner

Solomon is not alone in his skepticism

I have never seen such unanimous condemnation. See: Paul Steinberg, Joel Libava, Nick Bibby, Michael Webster, Bob Frankman, Guest: Brice Food litigation, and me (On the road to The Tipping Point?).


Risk Compensation: Why franchise laws & regulations cause more risky investing

January 27, 2009

noparachute1All franchise laws should be immediately repealed.

Everyone would be better off knowing that they’re in an airplane with an empty parachute.

Specific franchise laws give a false sense of security that, paradoxically, causes investors to behave in a more risky way than if there were no laws.

BTW: The push for franchise laws (with very rare exceptions) has always been by the franchisor and the franchise bar, not by franchisee investors or their advocates.

  1. The U.S. has had state and federal franchise laws for +40 years.  Alberta, Canada since 1971, Ontario since 2000. The outcome is the same: still very high investor risks.
  2. Relationship laws have existed since 1956 in the U.S. The toughest state law (Illinois) doesn’t seem to have had much positive effect, one way or the other.
  3. Direct regulatory federal laws in the U.S. and Australia, although they have the statutory power, are not used, except on the occasional token, hapless, no-name franchisor.

The primary mechanism that causes this INCREASE in risky investment behaviour is found in a theory called risk compensation:

Risk Compensation is an effect whereby individual people may tend to adjust their behaviour in response to perceived changes in risk…Another way of stating this is that individuals will behave less cautiously in situations where they feel “safer” or more protected.

The more we feel safe, the more risk we feel we can take on without additional costs. [Wikipedia]

Risk compensation is most clearly shown in studies of cars equipped with ABS brakes. The stated intent of mandatory ABS brakes was to reduce injuries and death due to collisions.

  • The irrefutable evidence, however, is that drivers (unintentionally, for sure) compensate for having ABS brakes systems by driving faster, following closer and taking corners more sharply (ie. they increase their risky behaviour).
  • The collision rates stays constant because of the human tendency to compensate for improvements not only in brakes but seatbelts, bicycle helmets and even parachute design safety improvements.

Note: Booth’s rule #2:

  • The safer skydiving gear becomes, the more chances skydivers will take, in order to keep the fatality rate constant.

Everyone’s first instinct is to cry for a law or an improved law against human behaviour. Risk compensation theory indicates that this is a fool’s errand and it is consistent with my study of franchise law over the last 10 years.

Opportunistic franchisors and their advisors know this human, perfectly non-rational characteristic to compensate for perceived “safer” situations.

Predators rely much more on their abilities to read human nature accurately, than do their prey. (It is wise to remember that there are only 2 principle ways to succeed: doing good work or cheating.)

Additionally, the Authority of the State is most clearly manifested in a law or regulation. Since the state holds a monopoly on coercive action (exercised by the police, military, courts, etc.), any franchise law signals a state “sanction” of sorts.

In this way, the state’s ultimate secular authority and legitimacy is attributed to the most poo-filled franchise system. It gives credence and camouflage to an industry without control or standards.

The Science of Persuasion: In the very important book Influence: The Psychology of Persuasion, Bob Cialdini calls authority his 5th of 6 “Weapons of Persuasion”:

  1. The logo of the FTC, the ACCC or the Ontario Legislative Assembly confers a legitimacy that can be exploited by some (badge of authority).
  2. Government guaranteed loans confer an aura that “This must be okay because the government and a Big Bank is risking their money, too” to even the most wicked scam (authority).
  3. The threat of  a lawsuit triggers (1) the fear of poverty and shame (bankruptcy) but also (2) of being perceived by other as behaving in an anti-social or near “criminal” way (social proof).
  4. Oh how charming everyone is, before you sign and how much you’ve become a shithead when you start to question the status quo (liking).
  5. How franchises that you should be paid to run, can instead be sold for 100,000s of  $ because of some “secret sauce” spiel (scarcity)

There is much hard science behind being persuasive that can be used for good or ill.

Take a look at this 3:11 video book review and imagine how Cialdini’s 6 Laws (reciprocity, commitment & consistency, authority, social proof, liking, scarcity) are used to snare franchisees.


A Rare and useful Gripe Site model

September 2, 2008

Anthony’s Franchise Information is a very instructive website for several reasons.

1. It shows how frequently a franchisor will start with one system (3 for 1 Pizza and Wings) and then branch out to other ones (Pizza One, Anthony’s Pizza Uno and Anthony’s Kitchen) once things become a little too “complicated”.

Changing countries and having your mother own the new corporate entities is a nifty way to dodge franchise law obligations. While it may no be legal, it is up to the usually broke future franchisees to prove a wrongdoing has happened. Chance of that happening: slim to none.

2. Just look at the string of Court decisions and unfulfilled awards against Mr. Reza (above, aka Anthony)  Solhi.

There is a lesson to be had here: Go ahead and sue and then try to collect your award. You frequently can’t. Often the assets have left the building way before the always-appealed trial decision is handed down.

3. Notice how there has been national television and newspaper coverage, even with a two part investigative coverage from the award-winning CTV W5 program (Taking your Dough)?

  • Think that a lot of publicity will make the bottom-feeders pay? Think again.
  • Think the “blue chip” systems will give up the slimiest? Think again: They both share the same group of invisible friends.
  • Think if they only knew they’d do something? Think again.

4. Read the Petition Narratives. These all represent new Canadian families that thought Canada was an advanced western democracy that protected its citizens. I hope they realize that all franchises have this potential. These guys were just impatient.

5. This is a very clear, concise and well-documented picture of 1 of the 1,200 franchise systems in Canada. It is only still up on the internet because the franchisor has not funded an aggressive litigation attack on the people that wrote it.

A more reputable or blue chip system would have served papers within 2 days and driven them all into bankruptcy to teach them a lesson. Standard operating procedure when the Franchise Bar runs the industry’s protection racket.

6. I like the inclusion of Known Associates. That name Nigel Mayne rings a bell but I can’t for the life of me remember why. Anybody in cyperspace help me out here?

7. How unwilling the Ontario government is willing to even look at revising the toothless Arthur Wishart Act (Franchise Disclosure), 2000 law. I know of and have met Minister Phillips and he is personally a man of extremely high character. As a cabinet member, however, he must toe the government’s policy.

  • If the Ontario and Canadian government will so blatantly block for the sleaziest of the franchise industry, what makes you think any other country is to do anything other than pay lip service to franchise investors?
  • Political stripe and jurisdiction are immaterial. As individuals, I know politicians and civil servants find defending a turd to be distasteful but they have no choice: It’s about Big Franchising‘s influence.

Franchisees would have to MATCH the combined political clout (investment, jobs) of all the automotive manufacturers, the national grocery chains, petroleum companies, product franchisors, largest law firms, financial institutions, etc. to have a fair fight at a real franchise law.

  • Yes, the truth has some weight. But often power defines what is true in a real politics.
  • The trick is not to give up but to resist in a more effective way.

Spring Surprise: Accurate, comprehensive, clear, high quality, transfat free, organic and bloody absurd disclosure

August 21, 2008

This 3:28 minute Monty Python skit demonstrates the problem with the fish-on-a-hook disclosure schemes.

  • Wanting more and more and more of totally irrelevant and bullshit information does not allow for good investment decision making,
  • But this cynical gamesmanship is 100% legal, notwithstanding this skit.
  • Substitute poo for lark’s vomit.

The franchise industry (Whizzo Chocolate Company) is played by Terry Gilliam. John Cleese is the superior and Graham Chapman is the poor wretch.


Digital franchisee advocacy poet/artist

August 21, 2008

Then

There is a 40-year history of repeated, mind-numbing franchisee head-in-hand stories that accurately apply to all business-format franchises.

It ain’t lack of knowledge, folks. The institutional memory of every western country’s commercial regulators is working perfectly well and is well-stocked with a litany of investor abuse, suicide and pain narratives. That’s their job and they have the finest educations in the world to archive information accurately.

Franchising is often regarded as the most studied and least acted-upon industry file in modern bureaucracies.

  • The universal moral outrage has always been: There oughta be a law!!!
  • So, for 40 years, well-meaning amateurs have used legislative or law-creating models to try to solve this problem.

How’s it been going?

Now

For the Mom and Pop investor in the most sophisticated market and lead country in the world, the current investor protection has degenerated and pretty much sucks [see Poo-filled franchise systems].

  • Internationally, the results for the majority of individual industry participants [franchise investors and their families who make up 50% of the actual flesh-and-bone people] are strikingly similar to a sharecropping or indentured servant labour and human rights model.

There have been of course many, many happy and profitable serfs throughout the ages and their denial and plain dumb luck allows them to sleepwalk while heaping contempt on the disgruntled, the FranWads, the Loser.

Future

A few people consider this general situation unacceptable and would like to try other ways of affecting change.

The Internet

If you would like to participate in the confidential discussions, planning and implementation to see how the latest technologies might clean up this sewer, [lots of potty talk on FranchiseFool lately, eh?] this is your chance to leave the tall grass and sign up.

Drop a comment to me and I will contact you [anonymously, of course]. Call me in Canada at 1-705-737-4635 if you like.

Analyzing franchisng as if it were a medium has been useful to me. McLuhan’s aphorisms and wordplay help.

The future masters of technology will have to be light-hearted and intelligent. The machine easily masters the grim and the dumb.

A moral point of view too often serves as a substitute for understanding in technological matters.

A new medium is never an addition to an old one, nor does it leave the old one in peace. It never ceases to oppress the older media until it finds new shapes and positions for them. 1964

The ignorance of how to use new knowledge stockpiles exponentially.

The modern Little Red Riding hood, reared on singing commercials, has no objection to being eaten by the wolf.

We are the genitals of our technology. We exist only to improve next years model. Art is anything you can get away with.

Violence is the quest for identity. When identity disappears with technological innovation, violence is the natural recourse.

The poet, the artist, the sleuth, whoever sharpens our perception tends to be antisocial; rarely ‘well adjusted,’ he cannot go along with currents and trends…. Their power to see environments as they really are.


Selling Poo-filled franchise systems likely 100% Legal

August 20, 2008

Michael Webster brings up a good point in his article Can You Sell an Unproven System as a Franchise? It is worthwhile looking at Janet Sparks’ original report in Franchising Times.

When discussing a pending Colorado lawsuit, I tend to agree with Michael’s prediction:

I believe that the law in this area will turn out to be, in essence, that you can franchise any piece of poo, as long as you “disclose” in tricky legal fashion that you are a piece of poo.

It is of course a stupid law that would protect investors in franchise systems [franchisors] by allowing any old piece of poo to float through the system – but such is the dedication to the power of disclosure laws, much like the efficient market hypothesis, our regulators and legislature will continue to allow indentured servitude as long as it properly disclosed.

This is the state-of-the-art of legal protection in the home of franchising. And they are very aggressive in advocating for this lack of accountability for franchisors around the world.

Michael again:

I think that Seid‘s position is legally correct, [franchisors have zero duty to provide a proven system] even though both immoral and absurd.

But that is the problem prospective franchisees face – any piece of poo wrapped in a franchise agreement, and FDD can be sold for hundreds of thousands of dollars to the unsuspecting public who believe that they are buying a “proven” system.

Disclosing you are a worthless piece of poo is all the protection that Big Franchising is willing to give you.

Go ahead and choose your Type of modern franchise [see Bristol Stool Chart, above]. Or…

  • For Mom and Pops, Franchising is Unsafe at any Brand.

If you knew how to separate the pepper from the fly poo, you’d start your own business and not share an industry rife with “proven” psychopaths. [social predators: lack of conscience & empathy, glib, bullying, violence]


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