Can an empire be saved by shaming investors like Ariel Buk?

August 15, 2010

There are costs involved in maintaining investor confidence and commercial relationships. Some people need to learn to “take one for the team”.Ariel Buk and Sonia Karabin may need to understand that they should cool down, be quiet and go away about losing a $85,000 deposit on a non-existent Ontario, Canada franchise. They and, by extension, the many hundreds of other “failed franchisees” need to be taught their role in this confidence game by the industry stakeholders: take one for the team or risk being shamed.

1. James Daw presents the story in yesterday’s Toronto Star article,  Ice cream dream becomes nightmare about Mr Buk’s experience with Piazza Gelateria and Café. This is shrewd. For example, Mr. Daw opines:

They [husband and wife] should have looked more closely at the business opportunity, and their decision to use mainly borrowed funds after Buk had lost his job.

They should have considered the minimum $300,000 cost of a lawyer to sue for a refund if things went wrong, and the chances of recovering anything from a relatively young numbered company.

2. Robert Cialdini lists authority as one of Six Weapons of Influence. My experience is that attorneys are given a  lot of authority by new Canadians. Many of us see past their pretensions, BS and fear. [Examples of authority.]

Ben Hanuka of Davis Moldaver LLP is quoted as saying:

“Very few mom-and-pop franchisees ever go to that length (of hiring experts to research a franchise opportunity),” says Hanuka. “It sounds too complicated to them.”

All it well with the world the reader is assured. Go back to sleep because these people get what they deserved. The blame lies with:

  1. the anonymous, individual “other” (mildly retarded immigrant scapegoat) deserved what he got (“your success follows from your blind obedience to authority” dogma)  and not that
  2. stakeholders align their self-interest in maintaining a facade of legitimacy: not a fake, or a Potemkin village scheme which has preyed upon identifiable groups, in plain sight,  since at least 1971.

Social Psychology-based Hypothesis: Elite stakeholders deflect systemic wrongdoing by using the largely-internal mechanisms of On Cooling the Mark Out by Erving Goffman (shame-humiliation effect) while using the public’s widespread fallacy of the Belief in a Just World, BJW (Melvin Lerner, retired University of Waterloo, Canada) in the country’s largest daily newspaper.

Every dying empire resorts to displays of public humiliation.

Why were people crucified in Jesus’ time?
Crucifixion was a Roman custom used on the worst malefactors and rebellious slaves. Judea was a tributary to Rome at that time. It is recorded by the Jewish historian Josephus that after the last rebellion of the Jews and the capture and razing of Jerusalem, the countryside was practically denuded of trees the Romans crucified so many. WikiAnswer

Detail: Crucifixion was often performed to terrorize onlookers into submission. Victims were left on display after death as warnings. Crucifixion was usually intended to provide a death that was particularly slow, painful (hence the term excruciating, literally “out of crucifying”), gruesome (hence dissuading against the crimes punishable by it), humiliating, and public, using whatever means were most expedient for that goal. Crucifixion methods varied considerably with location and time period…

While a crucifixion was an execution, it was also a humiliation, by making the condemned as vulnerable as possible. Although artists have depicted the figure on a cross with a loin cloth or a covering of the genitals, writings by Seneca the Younger suggest that victims were crucified completely nude. When the criminal had to urinate or defecate, they had to do so in the open, in view of passers-by, resulting in discomfort and the attraction of insects. Despite its frequent use by the Romans, the horrors of crucifixion did not escape mention by some of their eminent orators. Cicero for example, in a speech that appears to have been an early bid for its abolition,  described crucifixion as “a most cruel and disgusting punishment”, and suggested that “the very mention of the cross should be far removed not only from a Roman citizen’s body, but from his mind, his eyes, his ears.” Wikipedia

Humiliation is the most unpredictable, violent and destructive human emotion. It can result in many types of loss (see Bob “Bhupinder” Baber, WikiFranchise.org)


Evil in franchising? Look to the system not the individual

August 4, 2010

Social psychologist legend Philip Zimbardo makes an excellent point in this TED video.

He asks the question: Does evil reside primarily in…

  1. the apple (the individual),
  2. the whole barrel of apples (everything) or
  3. the barrel-makers (power brokers, the system, situation)?

I have concluded abuse within mom-and-pop franchising has evolved and resides mostly with the power elite: the franchise bar, the Fixers.

This is why modern franchising is Unsafe at any Brand.


Belief in a Just World, BJW: the fundamental franchising fallacy

July 22, 2010

Want to know the single greatest delusion that creates a misunderstanding of modern franchising?

Much greater than even the confirmation bias?

The Just-world fallacy:

…the tendency for people to believe that the world is just and that people therefore get what they deserve and deserve what they get.

Winning franchisees attribute their “win” to their goodness, hard work and skill:

If you have this belief, and something good happens to you, you may conclude that the world is just because you are a good person and so good things happen to you.

All franchisees blame the victim franchisee:

In the same way, when you see something bad happen to someone else, you may conclude that they did something to bring on this bad event. Otherwise, it would not have occurred since the world is a just place.

You see it at play every day.

Wikipedia discussion.


When high risk is disguised, franchise investors behave more recklessly because they are human beings

June 18, 2010

Perceived risk.

Big Franchising tries to minimize the public’s perceived risk of buying all franchises.

They:

  1. anchor their false legitimacy in “badges of authority” (FTC, banks, trade associations that claim to have a credible Code of Ethics or Ombuds program, justice system, toothless regulation and disclosure laws, government guaranteed loan programs, etc.),
  2. blame the fraud victims for their situation (ad hominem attacks),
  3. goes after military pensions by discounting worthless franchises (VetFran) and
  4. trot out the most blatant franchisee shills imaginable to hype foreign predatory systems.

Potential franchisees respond by buying higher risky offerings to satisfy their pre-existing tolerance for risks (see Target Risk: free online book by Gerald J. S. Wilde)

This is why franchising remains much, much riskier than independent businesses.

And getting riskier.

And without effective safeguards, franchising is Unsafe at any Brand.


The internet shocks and confounds water-based stakeholders

May 23, 2010

Modern franchising (franchisors, bar, franchisees, IndFAs) has evolved as if the industry were a plumbing/water system.

It was for many years:

  1. tangible, physical/one-dimensional, hierarchical, overt
  2. local/national largely, measurable, (hub:spoke structure, based on economics of scarcity/ignorance),
  3. highly controlled ($: valves, fittings, pipes, containers; can be patched),
  4. has inputs, use/abuse and disposal elements,
  5. externalizes waste via gatekeeper attorneys,
  6. launders and sanitizes industry reputations based on “new and improved” brand BS,
  7. utilized shame-humiliation to muffle dissent,
  8. burned off waste human life savings to reduce odor, and
  9. dogmatism largely unseen/unknowable outside of the royal priesthood (subterranean, veil of secrecy, culturally taken-for-granted: figure-ground problem).

However, with the start of something called “The Internet‘ and a proper issue indexing system, the industry environment has become much more like electricity or a gaseous/liquid and solid states:

  1. invisible, highly mobile, de-centralized, informal,
  2. it can leap or arc, volatilizes: solid right to gas),
  3. several dimension, pressures and forms (volts/amps),
  4. primarily transnational/international, (web structure, based on economics of abundance/knowledge),
  5. wild/unstable, cumulative, compressable, and
  6. much, much faster (travels at the speed of light/life).

As an internet activist, I am bi-/multi-lingual, which is a very Canadian thing. I  understand water, solid and air nations of franchising. I surf among and between the dying and newly born on a daily basis.

Old school stakeholders cling to their old ways:

wondering why more of the same-old solutions doesn’t work anymore.

“If we only had some more legal referrals” or “a better franchise law”, they all cry.


Franchising relies on human learning weaknesses

May 1, 2010

Visual information can be deceiving.

Dan Ariely suggests that humans are predictably bad in making financial decisions.

I believe that is true and explains much of franchising’s cash flow.


Imitation of business is their reality business

April 17, 2010

Franchising is an imitation of a real business.

The art is in the near-perfect staging of reality:

…they presented a more convincing picture of virtue than virtue presented of itself – just as the wax rosebud or the plastic peach seemed more perfect to the eye more what the mind thought a rosebud or a peach should be, than the imperfect original form wich it had been modelled.

William March, The Bad Seed quoted by retired UBC professor Robert Hare in his best book, Without Conscience Imitation Of Life, R.E.M. Charades, pop skill Water hyacinth, named by a poet Imitation of life. Like a koi in a frozen pond. Like a goldfish in a bowl. I don’t want to hear you cry. That’s sugarcane that tasted good. That’s cinnamon, that’s Hollywood. C’mon, c’mon no one can see you try. You want the greatest thing The greatest thing since bread came sliced. You’ve got it all, you’ve got it sized. Like a Friday fashion show teenager Freezing in the corner Trying to look like you don’t try. That’s sugarcane that tasted good. That’s cinnamon, that’s Hollywood. C’mon, c’mon no one can see you try. No one can see you cry. That sugar cane that tasted good. That freezing rain, that’s what you could. C’mon, c’mon on no one can see you cry. This sugarcane This lemonade This hurricane, I’m not afraid. C’mon, c’mon no one can see you cry. This lightning storm This tidal wave This avalanche, I’m not afraid. C’mon, c’mon no one can see me cry. That sugar cane that tasted good. That’s who you are, that’s what you could. C’mon, c’mon on no one can see you cry. That sugar cane that tasted good. That’s who you are, that’s what you could. C’mon, c’mon on no one can see you cry.


Pathology is to medicine what WikiFranchise.org is to franchising

March 3, 2010

Pathology is the study of death. To aid life, death must be studied.WikiFranchise.org retains and indexes dead franchise investments.

It is not inherently negative because its intent is to improve the economic quality of life for franchisees and franchisors.

People may bring their own sentiments into viewing it but that shows their bias, not anyone elses.


WikiFranchise.org is my gift to franchisees

February 11, 2010

Godin makes several good points about gifts:

When done properly, gifts work like nothing else. A gift gladly accepted changes everything. The imbalance creates motion, motion that pushes us to a new equilibrium, motion that creates connection.

The key is that the gift must be freely and gladly accepted. Sending someone a gift over the transom isn’t a gift, it’s marketing. Gifts have to be truly given, not given in anticipation of a repayment. True gifts are part of being in a community (willingly paying taxes for a school you will never again send your grown kids to) and part of being an artist (because the giving motivates you to do ever better work).

John and I created WikidFranchise.org, coming up to 1 year now. I archived the stories as a witness to franchisees’ lives.  We don’t take it personally that it has been almost largely shunned publicly. That’s consistent with my personal experience since 1998.

We didn’t have to do it and nobody has to read it either. But those that have, have been changed, I think, a little bit anyways. And it’s robust enough to handle a lot of extra eyeballs.

The imbalance between giver, receiver, and observer (powerful/less) is a just a byproduct of franchisees’ lives. That’s were the power of WikiFranchise.org comes from: life stories.


What do franchisees fear the most?

February 11, 2010

Other than death, themselves.

Franchising is a technology that changes personalities (identities), oftentimes for the worse.

The anger is turned inward because you (perceive) you freely invited this type of identity thief into your own home. Everyone’s grand play of your life is about gaining and losing identity: dying and being reborn repeatedly.

Don’t trust me and certainly don’t listen to the 1,001 squawking parrots in your lizard brain anymore.

Ask your partner, dummy.


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