Branding franchisees is a Canadian Family Affair

October 1, 2009

BrandingIdentifying what you own is important.

A permanent mark on ambulatory assets is an important initial goal

However, an unintended consequence over time is the accumulated effects of modern franchising on a society. The extended nuclear family is still the dominant source for advice, support and wisdom to individuals. This goes for small business investing, too.

I think franchising has worn out its welcome at many kitchen tables. Common industry practices have overgrazed the SME investment community.

Let’s take a look at some very conservative assumptions for Canada:

  1. 80,000 franchisees,
  2. 5% exit systems in one year, and
  3. 1/3 of exiting franchisees have what they perceive to be a “negative experience”.

Therefore, over 10 years 13,333 individual have had a sour taste that they attribute to an “unfair” situation ((80,000 x .05 x 10)/3). This doesn’t seem too much of a stray problem, especially when you assume they’re a docile and stupid quadruped (sheeple).

Information Sharing: But assuming franchisees are people, and people are social animals, they tend to communicate with others that they care about. And social media such as Facebook, blogs, YouTube, etc. seem to help enable anonymous warnings. Somewhere I read that every person knows 250 people.

So, maybe, there are +3.3 million that think franchising is dodgy. (13,333 x 250)

Or about 10% of all men, women and children who giving, for free, 24/7, an “anti-franchise” message to their family and friends. Battle stories along with life savings scars. Authentic, nitty-gritty, genuine, hyper-sincere detailed stories. Tangible life stories versus self-serving hyperbole.

No wonder there are so many immigrant family horror stories. In their innocence, they actually believe white crime is punished when it happens in Canada. Discovering a network of snakes in suits hiding in plain sight is the 2nd, much more profound existential trauma.

Teach you Children Well: Franchising is an exceptionally powerful teaching technology: the tuition to learn these lessons about modern commercial standards is not without cost. Dairy and beef producers have different management philosophies and practices.

From my experience, branded families are finding their digital voice and starting to be herd.

Franchising’s collapse: Tragedy of the Commons

July 8, 2008

The Tragedy of the Commons is an important concept that has very serious implications if you are thinking of buying or continuing to invest in a single-unit (Mom-and-Pop, $ as a high % of total personal net worth) business format franchise.

  • Investing [now] in any franchise is like feeding a corpse.

Why that is so is a complex question but one that should be asked. Briefly the Tragedy of the Commons is:

a type of social trap, often economic, that involves a conflict over finite resources between individual interests and the common good. It states that free access and unrestricted demand for a finite resource ultimately structurally dooms the resource through over-exploitation.

The fastest example would be air pollution. If you think this is just egg-head stuff you run the real risk of being wilfully ignorant with your life savings.

Such a notion is not merely an abstraction, but its consequences have manifested literally, in such common grounds as Boston Common, where overgrazing required the Common no longer be used as public grazing ground.

My position is:

  1. the lawyers have been, over time, so good at closing the loopholes that any hope for even legitimate remedy is practically impossible,
  2. the smart money has concluded some time ago that any franchise is too risky (too many types of fatal business risks v. independent businesses), and
  3. the industry becomes increasingly desperate for new sales.

As more and more people talk openly about their negative franchise experiences, the salesman can only increasingly prey on segments of our society that have not been fraud-proofed. There are no new pastures: they are all Wastelands.

The industry has, in my opinion, permanently and irrevocably destroyed their own means of survival. Every ecology has its limits.

  • Psychological denial is a cluster of behaviors and emotions that protects people from pain. It is most evident in the irrational outbursts (see shunning of Blue MauMau contributors) of experts with a career tied to the industry. Note: this emotion affects both “good” and “bad” actors [ie. the illusion of legal remedy enables delay of the inevitable burial].

It is a shame that the franchise bar, franchisors, salespeople, bankers, etc. have invested so heavily personally [education, reputation, status, income, identity] in a dead industry. But it ain’t no Greek tragedy, either as I know the quality of most of these men.

And it sure as hell needn’t cause you to join in their delusional thinking or fate.

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