Endless consultation and fact-finding, No action

February 9, 2010

One of the ways you control what people think is by creating the illusion that there’s a debate going on, but making sure that that debate stays within very narrow margins. Namely, you have to make sure that both sides in the debate accept certain assumptions, and those assumptions turn out to be the propaganda system.

As long as everyone accepts the propaganda system, then you can have a debate.

— Chronicles of Dissent, Noam Chomsky


Franchise Propaganda: Choosing to serve power, not Truth

November 20, 2009

Dealing with brand bullies is tough.

Not only do you have to do your own job, you have to try to separate the lies from truth.

The oldest franchisor trick is to divide-and-conquer by:

  1. spreading half-truths,
  2. promising “we’re really sincere this time”  (no…really),
  3. keep the dollars and “give” back pennies of formerly franchisee margin, and
  4. always delay any concession.

Many predatory franchisors do not want to demonstrate that they are deeply affected by competent franchisee association management. And they’ll certainly never give any credit where credit is due.

They act as if franchisees only have strong backs and weak minds and they come out with many new-found We feel your pain messages that are hollow when it comes to $ .

Want to know how Canadian lawyers think of Franchisees?

Franchisees are:

assets that talk back.

This is a direct quote from a published paper from the 2009 Ontario Bar Association franchise law conference in Toronto last October.

Assets that talk back.

Indeed.


Empire of Illusion, Chris Hedges: The Death of God & franchise propaganda

August 24, 2009

EmpireofIllusionThe title caught my eye.

Is franchising an empire built on brand-induced self-delusion?

If it is, then it appears to be just one in our post-modern world where any means justify the economic ends. So says a Pulitzer Prize winner, anyway.

The first chapter (The Illusion of Literacy) starts off with a bang. A quote from one of my favourite thinkers, John Ralston Saul that I’ve mentioned before (1., 2., 3., & 4.).

I especially like his contrary opinions about expertise: see Experts? We don’t need no stinkin’ professionals. Franchise law is an example of the hollowed-out perfection of the expert literate man.

Hedges lifts this quote from Saul’s 1992 book, Voltaire’s Bastards: The Dictatorship of Reason in the West:

Now the death of God combined with the perfection of the image has brought us to a whole new state of expectation. We are the image. We are the viewer and the viewed. There is no other distracting presence. And that image has all the Godly powers. It kills at will. Kills effortlessly. Kills beautifully. It dispenses morality. Judges endlessly. The electronic image is man as God and the ritual involved leads us not to a mysterious Holy Trinity but back to ourselves. In the absence of a clear understanding that we are now the only source, these images cannot help but return to the expression of magic and fear proper to idolatrous societies. This in turn facilitates the use of the electronic image as propaganda by whoever can control some part of it.

Again: …the use of the electronic image as propaganda by whoever can control some part of it.

Case in Point: A new television show named How’d You Get So Rich? features, of all players in this drama, a franchisee attorney (YouTube). This “news” is then picked up the industry-financed social media apologists, not just once, but twice.

Nothing says sincere, honest and authentic in both a visual and journalist sense, as the two words together: Joan Rivers. Celebrity spokespeople have been used in franchising brand management for a long time but sometimes it’s a double-edged sword.

Is this a too cynical interpretation of this type of modern myth-making?

Humble but poor outsider +  scrub toilets + Harvard MBA/law + In Communion with the holy American Church of Franchising = A Saint’s story (millionaire, cars, 2nd wife, fame).

I wonder what the majority of mom-and-pop franchise investors would like to say to Mr. Zarco? Is he their champion of the underdog? Does his story reflect this people’s:

  1. life reality or
  2. is this just another in a long line of cheesy attempts to lure more life savings into a dying empire, noteworthy since this is an unbelievably desperate economic/employment times?

An inspiring story on a marketing and franchising level.

And personally, to me anyways.


Health care reform “debate”: More industry Canada Goose-stepping

August 20, 2009

USFascism

Go ahead: Blame Canada

I’ve held off commenting on the current U.S. health care reform debate.

Until now.

This “debate” is structurally identical to what passes for communication in the franchise industry today.

Propaganda, pure and simple (biased influence)

Unmistakeably, evil if judged by historical wisdom authors. Still corrupting even to most docile sheeple.

Some of it bordering on Große Lüge (The Big Lie), analogous to Big Tobacco defense style, Nineteen Eighty-Four,  modern PR, corporatism…

I think today’s Toronto Star op ed is a good summary of how most Canadians I know feel about our system versus the U.S.’s. In Why I’d rather be sick here than in U.S., Bob Hepburn writes:

For weeks, Americans have been told that Canada pushes its sickest and weakest to the bottom of wait lists, that our health care is inferior, that it’s the government that decides who lives and who dies.

Despite these attacks, the reality is that the overall quality of health care experienced in Canada is far better than in the United States.

If you have any doubt, just ask yourself this simple question:

Would you rather be sick here or in the U. S.?

For me, the answer is obvious.

I have worked and studied in the U.S. for a total of 10 years and, although I have received good care from American doctors and clinics, I’d much rather be sick here.

Some inconvenient data:

  1. 87% of Canadians beleive our health care system is better than the U.S. (EKOS survey),
  2. +90% happy with quality of care they received,
  3. 100% of Canadians have been covered since 1967 while 50 million U.S. have zero coverage,
  4. zero Canadians have gone bankrupt because of an health care expenses,
  5. zero Canadians have had coverage reduced because of being at a higher risk, and
  6. 10% Canadian GDP on health care (16% in U.S., highest in world).

We have problems, absolutely. Were lots of problems when I was hit by a automobile as a kid in 1968. But I know one Canadian family that was not bankrupted by hospital invoices. I went on to work at Royal Victoria Hospital, St. Thomas Psychiatric Hospital and Victoria Hospital as a staff administrator.

Our first question is: How can we help? (not How will you pay?)

Ours is not a 100% government-owned, monolithic system. Many of the elements are privately owned and for-profit. It is wide-ranging but does not cover all health needs.

That said, even the most libertarian politicians know it is political suicide to even hint at tinkering with the founding principles of the Canada Health Act:

  1. administration,
  2. comprehensiveness,
  3. universality,
  4. portability and
  5. accessibility.

The debate, like in franchising, would normally be seen as just plain silly if it weren’t for the toxic effects on families and communities with these thought reform methods.

By its operating software, antithetical to a sustainable physical, spiritual and mental healthy human life. Machines running man.

Similar to many modern corporate technologies.


Franchisees are revolting, but in a new way this time

April 11, 2009

wolfgrandmaPredatory franchisors and those that continue to profit from their action give the distinct impression that franchisees are a lower form of life. They are:

  1. Slow.
  2. Greedy.
  3. Lazy.

This part-economic, -social and -cultural discrimination performs several very important functions for the elite but most immediately it provides the intellectual grounding for:

…”liberating” franchisees’ life savings by any means possible.

This liberation helps the economy because franchisees’ life savings (by this perspective) are inefficiently husbanded by stupid people. They prove franchisees’ passivity and idiocy every day when they hawk the latest loser business model.

Franchisees deserve what they get because they are a lower form of life.

They have, in modern secular and economic terms, a life unworthy of life (lebensunwertes leben). Everyone in the mob sleeps well because they are simply slaughtering subhumans’ capital heritage for the “common economic good”. The predators are society benefactors: genetic soldiers in the inevitable sacrifice of the weak being trussed-up to feed the strong.

  • This is how the wolf sees himself: improving free enterprise by killing the weak, lame, stupid, slow,  infirm or elderly.

Some, however, are starting to see this Walter Mittyesque view differently. They see modern franchising as a:

bastardization of valid biological natural selection theory mixed in with an infantile parroting of a 4th rate intellectual “stew” of eugenics, laissez-faire dogmatism, propaganda, piracy and mind-numbing self-interest.

Don Sniegowski at Blue MauMau reports today that Over a Thousand Franchisees Demand to See Televised UPS Store Trial.

LOS ANGELES – Against opposition by United Parcel Service, Inc., some 1,400 franchise owners have requested that the Los Angeles Superior Court allow them to see on closed circuit television a class action lawsuit of The UPS Store and Mail Boxes Etc. franchisees going up against their franchisor.

Further down in the comments, the “How-to-Contribute” is helpfully presented.

Before any valid re-ordering, chaos must reign. This seems to be the way it always happens. It starts in the city of angels but that’s not where it will end.

The cowards have always relied on the fixer but from now on, it’s beyond his reach. Memory, witness and narrative seem to have awoken from a form of spell.

upsstore, mailboxesetc, Peter Thomas

It’s over.


Franchisors starve while industry rag sharpens the axe spin

April 9, 2009

Might consider not putting your neck on the block this Easter.headlesschicken1McChicken (not eggs) are on the menu this season to an increasingly desperate selling machine.

An interesting article from Franchise Times this month, entitled: Tight credit is turning franchisors into lenders.

It almost makes sense blaming the credit crisis for making selling new outlets next-to impossible.

It has the almost-true ring to it, don’t it?

I agree that new franchise sales are in the dumpster and that the normal financing sources such as the SBA 7a loans and Canada Small Business Financing program have absolutely collapsed.

However, I believe that attributing it to the credit crisis is a huge misrepresentation

I figure the 7a and CSBF program loans have stopped because of the discovery of widespread fraud as defined by predatory franchise lending.

Notice how the industry media, franchisors, lawyers, lenders and consultants seem to speak as if they were one? Funny how they act as if they’re a group or one big happy family (less the franchisee), isn’t it?

This is why these are the business risks I coded when I sucked this article in WikiFranchise.org:

  1. Able to finance and sell negative cash flow franchise on crooked appraisals,
  2. Any excuse may satisfy a friendly editor,
  3. Appraisals grotesquely inflated,
  4. Appraiser and lender has cozy, repeat-business relationship,
  5. Bankrupt is bankrupt whether you put $1 or $1 million in at first,
  6. Buying an existing outlet even riskier than a new one,
  7. Churning (serial reselling),
  8. Desperate to sell any franchise for any price,
  9. Do the old franchisees get the same deal as the new ones?,
  10. Easy credit fuels worthless system sales,
  11. Even the “cheapest” will drain your past, present & future earnings,
  12. Excuse du jour, tight credit,
  13. False assumptions, multiple,
  14. Fee reduction always has a catch,
  15. Franchise bubble will crash much harder (non-franchised),
  16. Franchisor association public relations machine,
  17. Franchisor financing: faster in, out & resold (serial bankrupts),
  18. Franchisor guarantees franchisee debt,
  19. Franchisor picks up stores for a song,
  20. Franchisor takes franchisee store, resells to new dealer,
  21. Franchisor takes franchisee stores,
  22. Franchisor takes store and converts to corporate,
  23. Fraud financed by rigged appraisals used equipment & leaseholds,
  24. Higher short-term ROI to franchisor when churned (versus royalties),
  25. How much cash you put in at 1st is irrelevant,
  26. Kleenex system: tradename born to die quickly,
  27. Lending is subject to expert fraud because it is a credence good service,
  28. Lending duty never enforced via regulation or litigation,
  29. Loan servicers and brokers attracts fraud,
  30. Misrepresentations,
  31. Most lucrative form of commercial lending, franchising,
  32. Only one side presented,
  33. Ponzi (pyramid) scheme,
  34. Predatory franchise lending,
  35. Predatory franchising makes more money selling than operating system,
  36. Press release dressed up like journalism,
  37. Propaganda, thought-terminating cliches, The Big Lie,
  38. Reputation damage masked by confidentiality agreements,
  39. SBA 7a loans used to fuel franchise bubble,
  40. Selling price inflated by easy credit bubble,
  41. Sincerity,
  42. Sold for as much as much as they can get (next-to worthless),
  43. Sold only to people with no small business experience (very naïve),
  44. Spouse can sue for losses also,
  45. Spouse dragged into negative investment,
  46. Spouse must never sign any document,
  47. System designed to fail for franchisees

I don’t mind lies but I do dislike inaccuracies.


U.K. franchisor leaders record a new ethical Low: Hard-selling to the recently Unemployed

January 26, 2009

the_bfaTalk about stealing a guy’s life savings when he’s down.

And when I thought I had heard it all and that franchise hustlers would do anything for a sale.

Now word out of Liverpool that their franchisor-only trade association, British Franchise Association, BFA is hard-selling directly to recently laid off UK workers, via their former employers.

It’s like a scene out of the movie, GlenGarry Glen Ross, totally hardcore, old-school boiler room ABCs (always be closing):

We’re adding a little something to this month’s sales contest. As you all know, first prize is a Cadillac Eldorado. Anybody want to see second prize? [Holds up prize] Second prize is a set of steak knives. Third prize is you’re fired.

Lie. Cheat. Steal. All In A Day’s Work. Source

It reminds me of the ambulance-chasing personal injury lawyers forcing their business cards into the hands of people lying in the street from a car accident.

Obviously, what I (or the British public) consider to be ethical business behaviour may not be what the BFA brain trust considers to be fair game. The 2 characteristics of an ideal franchisee are: Did their cheque clear and Can they fog a mirror (alive)?

The story (Franchising could be your next career move) is a little awkwardly worded but these are the most flagrant lies that support this propaganda piece:

  1. franchising is a lower risk than non-franchised businesses (proven to be false),
  2. a BFA franchisor is less risk than someone who is not a member (not proven),
  3. the BFA is a benevolent society doing a public service (they serve their members’ interests),
  4. franchisees fail only because of their sloth or stupidity (fraudulent systems?) and
  5. the BFA represents both franchisors and franchisees (only franchisors).

All of these assumptions are false and dangerous. The BFA executives are either incompetent or knowingly perpetuating a cruel fraud, this time on the newly laid-off Brits.

  • You will be preyed upon when you are at your weakest time in your life.
  • Unemployment is an excellent time to buy into a phantom dream (In business for yourself, not by yourself; Be your own Boss) because you want so much to believe it (mortgage, kids, debt, etc.) you are temporarily a very shitty decision maker.

I know. I signed my franchise agreement two weeks before my unemployment benefits were to run out in 1992. BTW: an Ontario Justice said in 2000 that I had done the best due diligence she had ever seen but still lost $140,000 in 4 years, being sued, bankruptcy.

Another veteran but anonymous observer, Lionel Hutz PA, picked up the story and wrote about it on Blue MauMau under the following banner, BFA Wants Unemployed to Buy a Franchise. Lionel leads in with:

The British Franchise Association, the counterpart to America’s International Franchise Association, is directly approaching companies that are laying off employees, to persuade those newly unemployed to buy a franchise from one of their franchisor members.

Lionel goes onto say and pose a most relevant question:

Note the false claims that franchised businesses have higher success rates, and the assertion that British Franchise Association members must “meet the strict ethical and business criteria.” I wonder if the BFA has ever expelled a franchisor for bad franchising conduct?

Ray Borradale, a very effective Australian franchisee advocate and mouthpiece chips in with:

AFA, BFA, IFA and FCA read from the same book.  This is symptomatic of franchisors; good and bad – and it is dangerous.  I note the reference; “educate people about the many benefits of buying into a franchise” with contempt.  Where is the education about risk and due diligence?  This unbalanced marketing of franchising is not new and BMM has covered many similar stories. It is misleading and deceptive but it appears to be accepted by authorities in every country. [I would add the CFA to Ray’s list of talking heads.]

Remember: Franchising is practiced identically around the world. Some countries know about the dark side of franchising and have developed national spokespeople to combat the propaganda. Some countries (like the U.K.) do not know.

IN CONTRAST, note the level of discernment found in this Australian headline of January 26th (care of Franchise-Chat.com), The Franchising Trap:

The Australian dream of becoming self-employed can be the path to financial security, but it can also go disastrously wrong.

For years franchising has been viewed as a reliable, somewhat less-risky option for small investors looking to start their own business. But the 500-plus complaints received by the Australian Competition and Consumer Commission every year arising from disputed between franchisees and franchisors show that franchising is often not the easy entry to business that some people think.

In the U.K. there is a greater danger than is faced by franchise investors in Australia.  Aus does not have a small business government guaranteed program, but the U.K. does.

  • A guaranteed loan program can be misused to fuel franchise fraud. I wrote about it in Canada, I know that that it is happening in the U.S. and also in the U.K.’s aptly named Small Firms Loan Guarantee Scheme.

Heads up to these other countries that have a similar loan guarantee program for small business (Canada CSBFA, U.S. SBA 7(a), and U.K. SFLG):

  1. Korea,
  2. Japan,
  3. European Union (Netherlands, Denmark, Belgium, France & Germany),
  4. Indonesia,
  5. Malaysia,
  6. Nepal,
  7. Philippines and
  8. Taiwan.

Every country gets the type of journalism that it is willing to accept from it’s traditional media outlets. This type of breathless and mindless regurgitating of franchising propaganda is almost never seen in the U.S., Australia or Canada anymore. It was pushed out by volunteer franchisees getting on the back of its nation’s business editors.

  • These blatant lies will continue as long as they are not shot down by a small group of knowledgeable, experienced and vigorous group of Web 2.0 U.K. warriors.

Their basic training can begin once they choose to speak out.


Franchises bastardize charitable giving

November 24, 2008

mcdbun1Humans tend to like stories above almost anything else. We have survived by being excellent listener to and stories tellers.

Corporations via public relations and advertising know this and craft very sophisticated messages to have us believe what is in their financial interest.

I am reminded me of this everytime I go through a drive-thru and see the change collection box.

I know that the franchisee and the franchisor will not be contributing one penny to the inevitable cheque presentation for a sick kids’ house or camp or a wish trip to his first hooker.

I bet many people think that the franchises match their customers’ giving.

  • They don’t folks.

Charity is an important human impulse. I don’t like corporations that debase this human coinage. I’ve raised money for all manners of causes since I was 13 years old.

Giving is giving of yourself not buying an extra cookie once a year to send some snotty nosed brat to camp.

Seriously: How pathetic is it that a junk food firm feels compelled to peddle their empty calories in every pediatric hospital?

  • Is nothing sacred?

nazinursingmomThis image is a mid 1930 attempt to get Germans to support the Nazi charity, NSV (Nationalsozialistische Volkswohlfahrt or in English: National Socialist People’s Welfare).

The NSV was the official charity of the Third Reich.

This poster is translated as: “Support the assistance program for mothers and children.”

All ideologically-based belief systems use communication archetypes to reach and mold their followers.

Images have a power that text lacks.

Propaganda is defined by the winners.


lebensunwertes Leben: A Life Unworthy of Life

August 21, 2008

Medical doctors understand the way a human body functions. The Hippocratic Oath compels them to “do no harm” to their patient.

A white lab coat is worn by someone who would help you: Would heal you.

It was always a doctor who did the selection once the train arrived [“left” or “right”, lab coat over their black uniform].

Kanada 1 and 2 were where the valuables were taken more easily and warehoused. The Poles considered Canada the the land of great freedom and promise.

I have seen a recurring pattern with the 100s of franchisees I have met.

  • In a clever “judo throw” of reality, franchisees’ past strengths are used to create their future disaster.

Here is how it works:
1. Most people believe if they work hard, are careful and defer gratification for the future, their family is going to prosper or at least be okay.

2. People believe that life is generally fair (ie. people get what they deserve: both good or ill). They trust. (Which just happens to be the foundation of all of western society progress, btw).

3. A cleverly created but misplaced patina of success (ie. successful for everyone but the investor) that surrounds all franchises is used to numb the potential investor’s critical thinking abilities long enough to get a signature.

4. Franchising is a sophisticated machine which has some unusual design features. Its function is to vacuum life savings for its owners and supporters (sucks but does not blow $, as it were). The individual brands may be owned by franchisors but the modern engineers are the franchise bar.

5. Once the cash is gone, what pretense can be used to explain the ash that falls like snow?

6. Via the skillful use of propaganda (words in the service of self-interest not truth) you are managed (ie. numbed, isolated, shamed, silenced).

That is where The Gospel according to Killer Due Diligence comes in: It not only “blames the victim” but it goes farther: It extend the SS’s (Schutzstaffel) Cult of Hardness.

The Jews were considered lebensunwertes Leben. Physicians became the Volk’s biological soldiers, readily agreeing to remove the dead weight these genetic deficients; this non-people who had a life unworthy of life“.
The Nazi Doctors: Medical Killing and the Psychology of Genocide, Robert Jay Lifton

In a similar way, franchisees are sometimes considered ballastexistenzen [human ballast]

  • cheap labour and a source of wealth,
  • mentally and/or intellectually defective, subhuman, pathetic,
  • a gangrenous appendix to be cut out, and finally,
  • excrement to be disposed of as cheaply and quickly as possible.

Direct medical killing and the jealously guarded administration of Zyklon-B gas was only developed because of the psychological damage done to the Einsatzgruppen assigned to kill prisoners by firing squad.

Rudolf Höss:

I had heard of Eichmann‘s description of Jews being mown down by the Einsatkommandos armed with machine guns and machine pistols. Many gruesome scenes are said to have taken place, people running away after being shot, the finishing off of the wounded and particularly of the women and children.

Many members of the Einsatzkommandos, unable to endure wading through blood any longer, had committed suicide. Some had even gone mad. Most of the members of these Kommandos had to rely on alcohol when carrying out their horrible work. p. 159

The peak killing rate at Auschwitz-Birkenau was 20,000 within a 24 hour period.

Economic Application: I have heard this same form of argument used in franchising. You say and actually believe that taking someone life savings is a noble act.

REASONING: In this world, some people have life savings that they don’t really don’t deserve. They have inherited it or it’s simply fallen into their lap. The test is if you can take it from them, they are not using it properly. They are inefficient stewards of wealth in a national, cut-throat economic war against [fill in the blank false enemy du jour: huns, commies, Japan, terror, etc.]

  • The liberator/thief sees himself as: a teacher [hard lessons to be learned, yes, but being fraud-proofed is a valuable set of skills]; a public benefactor [economic soldiers, in an inverted Robin Hood scenario] a visionary stormtrooper in an extreme ideology where even the word “liberal” is ridiculed as being the same as being soft, stupid: a loser.
  • Ayn Rand, libertarianism and militant individualism can be interpreted to help asway the professionals’ cognitive dissonance [wading through blood] as did the medicalizing of mass killings relieve the Einsatzgruppen of their psychological trauma of the biologically inferior human ballast in WWII.
  • The modern franchise elite do this by re-allocating wealth form small to large investors. The franchisors take the public vilification while the franchise bar tries not so successfully to wash their hands.
  • They are improving our economy by doing the what the doctors did in Nazi Germany: instead of being biological soldiers in the service of the Third Reich [accelerating the inevitable genetic purification of a bastardization of Darwin’s natural selection theories via eugenics], the liberators/thieves, crusaders in a holy war to liberate capitalism.
  • “Don’t you know that we are in a war and the normal rules do not apply? If we are to grow, we cannot afford the inefficient investment decisions that the losers make,” the disciples of unfettered capitalism shout.
  • “Yes, some people will be harmed in creating the thousand year market empire but it will be worth it. The individual must become hardened and accept their role. Everyone has their role to play their place to bask in the glory of the radiant new empire.”
  • “Trust us…We will take care of you.” See Justified Theft: A Life unworthy of Dignity.

BTW: Dr. Unbloody, “Beppo”, Josef Mengele, 2 PhDs, 1935


Franchising is much riskier than independent business

July 24, 2008

The franchise industry is well-known for its hyperbole bordering on propaganda.

For the latest example of these half-truths and silent misrepresentations see a recent modestly named article: Franchising to the Rescue.

In my opinion, this is an unnecessarily biased and dangerous article for small business investors.

It’s assumption is that franchising is a safer investment than independent business. That claim has been exploded for at least 10 years and totally ignores the recent New Zealand experience with Blue Chip and Green Acres.

  • No mention, either, of the two Australian state franchise inquiries and the upcoming national Oz industry probe. [see an excellent Oz resource, BakersDelightLies.com]

All the credible academic research comes to the opposite conclusion: Franchising is much riskier than independent business.

Research: There is an big quality difference between true academic work [published in refereed journals, funded by public money] versus private research [biased, paid for by interest groups]. It is not enough to say that there are no reliable statistics and then go ahead and spout off unsubstantiated figures.

  • Everyone knows the public remembers the numbers while forgetting the qualifications.

Publishing these self-serving guesses [with zero opposing opinions] is bordering on reckless media behaviour. Mom-and-Pop investors are risking their life savings and homes, after all.

Timothy Bates: In 1996, this university professor published an academic study that rocked the franchise industry. Bates was contracted by the Office of Advocacy of the U.S. Small Business Adminstration to look at survival patterns of franchised and non-franchised businesses.

Survival Patterns Among Franchise and Nonfranchise Firms Started in 1986 and 1987 concluded the following [see S.B.A. Research Summary, Related Bates paper]:

  • young independent small firms had a better chance of surviving than small, non-corporate franchises,
  • while franchise firms were better capitalized than non-franchise firms, about 62 percent of the franchise firms survived, versus 68 percent of the non-franchise or independent firms,
  • average profit was much higher for the independent businesses; profits were negative, on average, for the franchise firms,
  • franchises purchased from a previous owner were riskier than franchise firms started from scratch, and
  • only 49 percent of the franchises started by women in 1987 were in existence in 1991, compared with 67 percent of the independent firms started by women.

Within the report itself, Bates said:

…the franchisee route to self-employment is associated with higher business closure rates and lower profits for the young, largely noncorporate firms, relative to independent business ownership. p. 8.

U.S. Government: On June 24, 1999 Dr. Bates appeared before the U.S. House of Representatives’s Subcommittee on Commercial and Administrative Law. The Oversight Hearings on the Franchising Relationship were called to review the state-of-the-union in American franchising. Click here for a .pdf copy of his testimony.

Bates:

Findings of my research indicate that new and small franchisees are more likely to discontinue operations than independent startups, and this holds true when firm and owner traits are controlled for statistically. One clear-cut finding was that franchisees starting by purchasing the firm from a previous owner were riskier than franchisees starting from scratch. A person entering self-employment by purchasing an ongoing franchise risks acquiring a firm that is more likely than a de novo startup to go out of business within the next few years. [my emphasis]

These Kiwi industry gentlemen know all about


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