Franchising is the latest Big Con

September 10, 2008

I believe modern mom-and-pop franchising has largely morphed into a Big Con.

Illusion of Legitimacy: The methods of the confidence game have evolved into a much more difficult fraud to deal with because there is very little difference in the look of a blatant scam and a legitimate business format franchise.

Anyone who says you can tell the difference on a pre-sale basis is a liar and scoundrel. 95% of all problems happen after you sign; when you are caught in an almost impossible situation.

And perfectly good little systems can be turned bad by a change of management or ownership, in the blink of an eye.

As John Kenneth Galbraith said:

The man who is admired for the ingenuity of his larceny is almost always rediscovering some earlier form of fraud. The basic forms are all known, have all been practiced.

The manners of capitalism improve. The morals may not.

The prospects for legal protection are not promising.

David Maurer concludes his 1940 book, The Big Con, with the following:

Confidence men trade upon certain weaknesses in human nature. Hence until human nature changes perceptibly there is little possibility that there will be a shortage of marks for con games. So long as there are marks with money, the law will find great difficulty in suppressing confidence games, eveen assuming that local enforcement officers are sincerely interested. Increased legal obstacles have, in the past, had little effect upon confidence men, except perhaps to make them more wary and force them to develop their technique to a very high level of perfection… [my emphasis]

The Wire, Rag and Payoff games are essentially dead.

  • They have been replaced by sales agents (ropers), franchisors (insidemen) and those that profit from keeping the marks cool so they don’t wise the next fool.
  • The fix is wearing thin.

Does Big Franchising at least legitimize The Big Con?

September 7, 2008

I have been reading a neat book called The Big Con: The Story of the Confidence Man by a dead American linguistics professor called David Warren Maurer.

This is what Wikipedia has to say that is catching my eye:

Maurer spent his career recording the argot of moonshiners and pickpockets, but The Big Con is his masterwork. …The Big Con reeks of 10,000 conversations in poolrooms and Pullman cars; its sentences ring with the raffish patois of ’20s and ’30s Americans on the move. “I’d sooner be a lamster any day than be tied up to a lop-eared mark,” grouses one sharpie stuck with simpleminded prey.

While working on his magnum opus, Maurer won the trust of hundreds of swindlers, who let him in on not simply their language, but their folk-ways and the astonishing complex and elaborate schemes whereby unsuspecting marks, hooked by their own greed and dishonesty, were “taken off” – i.e. cheated – of thousands upon thousands of dollars. The products of amazing ingenuity, crack timing, and attention to every last detail, these “big cons” richly deserve Maurer’s description as “the most effective swindling device which man has ever invented.”. The Big Con is a treasure trove of American lingo (the write, the rag, the payoff, ropers, shills, the cold poke, the convincer, to put on the send) and indelible characters (Yellow Kid Weil, Barney the Patch, the Seldom Seen Kid, Limehouse Chappie, Larry the Lug). It served as the source for the Oscar-winning film The Sting and will delight fans of such writers as David Mamet, Jim Thompson, Elmore Leonard, and William Burroughs for its droll, utterly authoritative look at the timeless pursuit of relieving one’s fellow man on his surplus cash.

And an except of a book review from the Mad Professor:

If you’ve seen The Sting, then you have the basic idea of how a big con works. It’s basically a theatrical production with elaborate sets and costumed actors for an audience of one. But the audience member thinks the production is real, and ends up losing his life savings by the time the curtain closes. The two most surprising things I learned from reading this book: one, the con men, who work so hard to set up a con and take the mark’s money, usually blow their cut immediately by gambling it away, and two, the victims of cons often return to the con men to get fleeced again, even when they know they were conned the first time.

To me, the second point is crucial: Maurer says the swindlers tell him that over 50% of victims get taken at least 2 times. Many get taken several times…by the same play [versions of the big con].

Another review which ends with the following question:

…where is the big con today?

Fueled with SBA or other easy credit, almost anyone can be roped into the next half-assed, unproven franchise scheme. They don’t just take your current dough and leave you with a warm feeling for the inside man, they take your future life savings, labour and often your health. And your spouse’s too.

  • You end up broke, gagged, shamed and most dangerous of all, unaware of how to learn from these experiences.

Big Franchising acts [alone or as a tag team: see Australia lawmaking] to protect their legitimate business interests which is fair in a market-driven democracy. But by doing so, they create a legal  and political influence umbrella that nourishes a commercial cancer called mom and pop franchise opportunism.

Economics classifies this out-of-control negative growth (cancer) an externality,


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