Franchise bar: Serving those most able to pick up the tab

95 per cent of legal fees are paid by franchisors
Competition rulings
Cost of doing business
Delaware-based corporation
Exponential increase in franchise bar services ($ and influence)
Franchise relationship sticks franchisee with legal liability
Franchisor will appeal decision to gain time
Guilt: pain caused by doing what you know to be wrong
Lawsuits, individual
Lawyers being threatened with lawsuits for speaking out
Lawyers sued by franchisor
Lawyers threatening franchisee advocates
Refused to answer politician’s question
Run the billable hour clock
Settlement just covers fees
Sham corporate structures designed to evade responsibility
Shell companies
Trademark re-acquired by franchisor after insolvency
Trial decision always appealed
Uniform national franchise law
White-knight lawyer turns black

False hope: once a mark, always a mark

Alternate dispute resolution, ADR
Arbitration, transparent
Buying a job
Call for a public enquiry
Call for franchise law
Class-action dead end
Contingency fees
Dispute resolution
Due diligence
Formal parliamentary public hearings
Good faith + fair dealings = false hope
Government guaranteed loans
Government investigation
Illusion of government oversight
Jackpot justice
Justice
Lawsuits, class action
McDonald’s of…
Mediation: information gathering that aids the destruction of valid legal claims
Multi unit carrot
Old-fashioned idea that politicians are relevant
Ombudsman
Private right of action
Punitive, exemplary and/or aggravated damages
Raining litigation
Rate of return on investment
Reparations
Return on investment
Success will happen if I work harder
Variable rate royalty fees
Withholding fees is extremely hazardous

Fear makes you lick the master's hand

Afraid to talk
Air of desperation
Bankruptcy, both franchisee and spouse
Bankruptcy, first the company and then you personally
Broken relationships, ruined lives and alienated children
Bullying
Debt traps
Disgruntled
Divide and conquer
Drive them out of business
Drop the lawsuit and we’ll give you what you want
Expand with another store across the street or we’ll sell to new franchisee
Extortion
Fear mongering
Fear of bankruptcy delays the hard decisions
Fear of poverty
Investment made during stressful life event
Lawyers issue threatening letters
Life savings gone
Sell or we will sue you
Suicide committed in franchised store
Termination threats
Terrorizing franchisees
Threatening letters
Threatening staff
Threatens to drop client
Threats against franchisee advocates
Threats against supporters of franchisee association
Threats of lawsuits
Threats of physical violence
Uttering threats
Violence
We will bankrupt you

The usual suspects

Alberta Franchise Act, Canada
Alien Tort Claims Act
Arthur Wishart Act (Franchise Disclosure), 2000, Canada
Australia Franchise Act
Australian Competition and Consumer Commission, ACCC
Companies' Creditors Arrangement Act, CCAA
Competition Bureau
Crown corporation
Federal Bureau of Investigation, FBI
Franchise Sector Working Team
Franchising a crown corporation
Iowa Franchise Investment Act
Office of the Superintendent of Financial Institutions, Canada
Ontario Provincial Police
Ontario Public Hearings, Canada, 2000
Ontario Securities Commission
Royal Canadian Mounted Police, RCMP
U.S. Federal Trade Commission, FTC
Uniform Franchise Offering Circular, UFOC

Lawyers protect their monopolies

Able to put kids through graduate school
Access to justice
Alan Eagleson
American Bar Association, Forum on Franchising
Bankruptcy lawyer going bankrupt
Bar associations
Class action only as good as the lawyers involved
Disbarred
Disgraced attorney
Fee surprises at settlement time
Fiduciary duty
Fraudster lawyer
Jealously guarded monopoly on the provision of legal services
Lawsuits just a cost of doing business
Lawyer drops client
Lawyers becoming religious
Only one side presented
Professional misconduct
Protect gross negligence, wanton recklessness and intentional misconduct
Refuses to take client
Solicitor-client privilege used to shield white-collar crime (self and others)
Tier 2 lawyers
Trust account irregularities
Wiretap authorization virtually impossible if a lawyer is the target

Intentional insolvency: System worth more dead than alive

Development deal collapses before risk shifted from initial investors to sub franchisees
Franchisees are pawns in insolvency flip
Franchisees dragged into complex legal dispute their franchisor created
Franchisees' equity destroyed in unrelated part of trademark system
Franchisor offers to help its franchisees go independent
Insolvency trustee, consultant and auditor same firm
Insolvent system renamed and sold to a relative
Intentional franchisor insolvency
Opposition to fake franchisor insolvency and ownership flip
Trustee/consultant does mass terminations during protection to flip to new owner

Sunk Costs: beg to get back 15%

Assets sold for fraction of cost or value
Credit note system
Designed to fail as franchise investment
Forced to invest in unproven concept
Leasehold improvements worth next to nothing
Offered much less than market value of franchise
Sunk Cost Fallacy: very hard to resist putting good money after bad
Sunk costs: franchisee's trapped capital keeps them chained to treadmill