Labor Day in the life of a Zee

Ever ask a zee how they feel about holidays?  Just what goes through the mind of an average person versus the franchisee owner when “holiday” is discussed?  Ever wonder how a zor spends their holiday? In the Americas, the word is “vacation”.  Every paid worker spends their year planning and imagining the relief those two or three weeks truly bring to the family and one’s own inner balance of family vs work vs quality of life.  In Europe, it’s holiday and it’s twice as long as the Americas because most Euro holiday packages are four to six weeks.  The European has come to expect holiday and due to the lack of opportunity, in some respects holiday is one’s privilege.

In the thinking of the blue collar or the white collar or the Euro or anyone else who has never truly owned and run a business, let alone a franchised business, there is no reference or association as to what a holiday brings to a zee.  Their impression is that a small business owner who owns a high-profile franchise operation must already be rich.  They do not know that the life savings and the mountain of debt needed to serve them their 15 second servings of fast food heart attack will never allow me to enjoy another holiday.  The reference of outlay at the onset of such purchase of franchises is referred to “sunk costs”.  Oh how bloody true is that depiction!

Here are just a few interesting problems of the zee during holiday:

• Workers are off, zee gets to stay and keep the doors open (bills don’t do holidays)
• Workers are off, doors have to stay open, otherwise the revenue of the holiday revelers will be lost
• If it’s a day in which stores are closed due to law, I’ll stay and catch up on books and admin as the workers aren’t in
• If it’s a party day where retail is open, I get to stay and help the skeleton shift (who bitch and moan that they have to work)
• Leading up to the holiday, everyone leaves early, meaning I get to stick around to make sure everything is set because I own this mess
• And finally, the schedules are all mine to own and fix and work with due to the fact that no one owns anything but me (the R word means nothing to the hourly worker)

And last but not least, I can visualize and imagine the wonderful times the zor is having attending special events as grand marshall (the honor and respect he purchased with my life savings and ongoing royalty abuses).  After all, his ad fund, his marketing fund, his kickbacks from vendors and his admin, his legal support are all coming from the money I gave, will give him and am generating while working over this glorious holiday!

Bloody

Who Pays for TV and Radio Advertising?

Turn your television on and for a single hour, jot down the commercials you see on any of the major broadcast or cable channels (ABC, NBC, CBS, ESPN, CNN, etc.).  On major channels, there are three main categories of advertisers.  (Check the bottom of this post to find out what those three are.)

Though it cannot be proven, franchising advocates continuously quote that 40 to 50% of all retail is franchised.  (The data is owned by too many people and influenced heavily by pro-franchisor predatory bigots.) When you analyze the data of your one hour’s worth of major network advertising, it will become apparent just what the three verticals are that spend the lion’s share of advertising dollars with Madison Avenue agencies.

But that’s not the question or the purpose of this post.  The question is: Where is the money coming from?  First of all, some history.  McDonald’s ignored all conventional wisdom over three decades ago when they surpassed the 100 million dollar mark in advertising spend in a single year.  Most could not fathom the thought of such.  How did they justify it?  Simple, it wasn’t their money!  It is the money of hard working franchisees who pay exorbitant royalties to franchisors who spend it freely and with reckless abandon.  McDonald’s practices are truthfully depicted in in Fast Food Nation, author Eric Schlosser.  They pioneered the principle of going after your children, the pester power method.  But that again, is not the issue.  The real issue is that many franchises are B2B and not B2C.  Nearly all of the franchises that are offered at low entry fee are B2B.  These predatory franchisors have no intention of doing anything with the hard-earned  money they collect for advertising from your profits.  When asked the question of where that money is spent, or better yet when reading an FDD or UFOC, it is up to the sole discretion of the franchisor whether or not those funds are even earmarked for advertising.  Read an FDD and if you can even find the subject covered, you will see that the money can be used for advertising or any other thing the franchisor chooses.  Many simply use if to fund their playboy lifestyles.

So the next time you see David Brandon bragging that he’s giving money back to Main Street, don’t believe it.  He’s spending the money of the franchisees as though it is his.  When you watch a Subway commercial, remember that Fred DeLuca is the slimiest franchisor in the world, fighting more lawsuits than McDonald’s, Dunkin Donuts and Pizza Hut combined.  Fred gladly sells single franchises to unsuspecting immigrants (all they need is a pocket full of cash) when he couldn’t make it until he owned three!!!  When you see a Quiznos (seedy and poorly thought-out million sub giveaway campaign), know that Rick Schaden and his staff of flunkies approved the campaign and then fired the VP of Marketing (who came from telecommunications – how ignorant and cheap is Schaden for even hiring her) as a scapegoat.  (It’s only a matter of time until Quiznos loses the pricing game, thus driving all of their franchisees out of business.  Freddy D. has 6 or 7 times the number of franchisees, thus a war chest of over 400 million dollars a year at his disposal (pun intended).  Ricky hasn’t a chance of winning a price war.

So the next time you watch a Nascar race (if you can stand the fact they never learned to turn right;), count the number of advertisers who sponsor a car and then see how many are franchises.  Then realize that Ricky and Freddy and Davey are all spending 4 to 5 MILLION per car to put their brand on the hood of a race car!  That’s right, the hard-earned money of your relatives or friends or immigrants (who are unaware because they’re probably working 7 days a week just to make ends meet) is being spent so Ricky and Freddy and Davey can sit in the infield or in VIP boxes,  get special privileges at the expense of those who labor just to scrape by.

The three vertical leaders in advertising are auto, beverage and food.  (Yes, they are all franchised; GM not for long – they are soon to be owned by you and your Commander-in-Chief, who by the way, operates just like a franchisor.  He spends your money and you have absolutely not one damn iota of say in any of those decisions!)

Bloody

A Day in the Life of Becoming a Franchisor

Now for the perfect job, the franchisor:

1. Hijack a concept that sells (regardless of profit), create an alternative product with not a creative bone in your body or differentiator (other than price) to separate yourself from the leader.  Good models are Subway/Quiznos, Dunkin Donuts/Tim Hortons, Gold’s/Curves, Taco Bell/Taco Johns, McDonald’s/Burger King, Red Lobster/Long John Silvers, Dominos/Papa Johns, Midas/Meineke, Kinkos/UPS Store, Carvel/Baskin Robbins.
   
2. Find a big franchisor law firm that writes bullet-proof UFOCs/FDDs.  “Put in two CYA clauses for every claim your broker will make.”
   
3. Get a referral from your law firm for that less-than-respectable banker that can build a contract based on UCC and not common law.
4. Sell the concept to unsuspecting franchisees who are naive and in a place of vulnerability (immigrants mostly, displaced corporate America , mom and pop hopefuls) to finance your venture (mostly because anyone with a brain won’t touch such a business plan).
   
5. Then watch the money come in.  Schedule your 12 weeks of vacation per year, buy your VIP box at your favorite stadium and start shopping for yachts.  It’s only a matter of time until you have the cash flow to live like a king.
   
6. With some of that initial franchisee deal money, hire some bloke who can’t otherwise make it in the real world to be your marketing officer (sort of like Quiznos hired Steinfort, some young 30 something who’s only experience was in telecommunications!).
   
7. Introduce them to the other brilliant creative minds on Madison Ave. and the party will now begin!  All you have to do is attend dog-and-pony shows, make a decision and whatever you choose is paid for by the franchisee!
8. If you need more ad money, simply raise the rates on your ad royalties and make it retroactive to every FDD/UFOC (that confirms it’s coming out of the franchisee pockets of course). No one can object because if they do, you can pull their franchise!
   
9. Cut an ironclad kickback agreement with your vendors and dictate to each franchisee that they have to buy from that vendor.  If they refuse, threaten to pull their franchise and thus their livelihood.
   
10. Hire average salespeople (yes men) who will do exactly as you instruct them in coloring the truth just enough to the franchisees to get them to sign.  Those from the mortgage industry, timeshare sales, car sales and any other large ticket, one time products make great fits.  They’re used to instilling the confidence necessary to maket the sales and because it’s only one-time, they don’t have to worry about repeat sales.  Salespeople with integrity and honesty are considered bad prospects.
    
11. Spend all your time building your marketing programs to sell more franchises, letting the other stuff work itself out.  You don’t need rockstars for this, average blokes from the local community do just fine.  If you hire too much IQ, you suffer someone questioning your motives and the long term.  Remember, your job is to sell franchises, not worry about how they do as a business.  If they fail, you have the opportunity to sell another in the same region.  And because you the majority of your money on the initial sale, their success or failure is absolutely of no concern to you.

Stop by tomorrow to learn how to build your internal staff to accommodate your new high roller lifestyle.  We’ll teach you just what type of people can help you build your kingdom with the life savings of the naive who are seeking to survive.

Bloody

Blood is in the Water – Here Come the Franchisors!

CHUM [chuhm] – noun

1. Decent upright and trusting citizens having been layed-off or downsized by corporate America   (in their effort to appease Wall Street, the rich, the elite, Political pundits & Capitol Hill) finding themselves in the overpopulated labor pool.  In possession of 401k savings, retirement and severance packages.
2. Veterans who have served our country who have returned and now find themselves in the job market but without the skill sets on their resume that corporate America chooses to accept.
   Synonym = franchisee

“CHUM-MING” [chuhmng] – verb

1. The art of writing a UFOC (Uniform Franchise Offering Circular) – pre 7/2008 now referred to as an FDD (Franchise Disclosure Document) in an effort to make an otherwise worthless business saleable to chum.
2. The art of luring chum into an indentured & subservient relationship with promises of ownership, independence and autonomy using terms such as [own your own business without the risk], [take less risk], [be your own boss], [work within a proven framework]. Commonly practiced by opportunists to create inflated revenues, building itself a low cost labor network to generate marketing dollars resulting in greater revenues. Only works within the framework of a franchise brand which was at one time overseen by the FTC (never a factor for franchisees) and has absolutely no regulation or oversight today.
3. Benefits include:
   1. Limited administration at headquarters – franchisees are treated like second-class citizens by corporate people who have never been in the business – mostly low level b-rated admin people or relatives of the chummers
      
   2. Huge cash flow as franchisees must give chummers royalty, advertising monies, vendor kickbacks (and anything else the chummer dreams up),  whether the chum prospers or not
   3. Living the life by simply buying more air time on national and local networks and sending the bill to the chum.
   4. corporate boxes at sporting events, playing golf on the PGA with pros, sponsoring NASCAR teams (all at the expense of those stupid franchisees we call ‘chum’).  Synonym – “franchising”
      

Origin: Singer Sewing Machine Company – 1800’s

Firms who paved the way to this model of abuse:  McDonald’s, Dunkin’ Donuts, Subway, Pepsico, Coca-Cola, Ford, Chevrolet, Chrysler, Cendant – now Realogy (Century21, Coldwell Banker, Sotheby’s Real Estate, ERA, Better Homes & Gardens Realty), Wyndham, AAMCO, Blockbuster, Yum! Brands (KFC, Taco Bell, Pizza Hut, Long John Silvers, A&W) – and the list goes on and on and on.

And you thought those guys were just marketing genius’?  I think they attended Bernie Madoff’s alma mater.  Or perhaps Mr. Stanford’s school of investment?

Free Franchise – Come One Come All – Step Right Up! The Show Will Now Begin!

http://www.rrstar.com/news/x617071075/Printing-distributor-targets-Rockford

Please tell me you’re not that naive!

PFG Ventures is silently backed by the slimiest business dealer in the universe – Fred DeLuca.  (If you don’t know the connection, Mr. Deluca, the co-owner of Doctors Associates is the franchisor for Subway.  There are more lawsuits against Mr. DeLuca than McDonalds, Burger King and Dunkin Donuts combined.)  Muzzillo ran into trouble back in the ’90s and DeLuca bailed him out and took majority share in the company.  Then he taught Muzzillo how to write all of his contracts with arbitration clauses in them so no one could sue him.

Greg Muzzillo then divorced his wife and sued her in court, then appealed the judgment in her favor to make the misses share child support and take away her alimony when she had faithfully served him through the rough times.  She was unemployed at the time and he was making $30,000/month.  The judge sent him packing.

Thus, the reasonable needs of the children and the relative abilities of the parents to provide financial support are primary factors the trial court must use to determine the child support contributions of each parent. The trial court in the present case did precisely that. Plaintiff earns more than $38,000 per month and has ownership interests in various companies that are worth approximately $2,000,000. Defendant, by contrast, is not currently employed and does not have any monthly income, although we note that she is expected to “take steps in the near future to develop, and use, her earning capacity.” In this case, the trial court did not abuse its discretion in ordering plaintiff to pay one hundred percent of the child support. This arrangement correctly reflects that the children would have received one hundred percent of their financial support from the parent earning the income if the parents had been living together.         We affirm the order of the trial court.

http://www.aoc.state.nc.us/www/public/coa/opinions/2005/unpub/040039-1.htm
He then remarried an investment banker and now lives the life of Reilly!  He and his new wife don’t even go to the office.  They make the company blokes travel to Detroit to have meetings.   How does he do it?????

PFG has ruined many a people in its “free franchise” crock of watered down confidence schemes.  PFG is one of the few that gets everyone on the backside.  Most confidence schemes take the marks up front.  PFG has figured out how to get them for the long haul.  I’m sure it wasn’t planned, but it worked out that way.

This is why they give it away for free….They take kickbacks from their hundreds of printing, promotional and apparel vendors promising the franchisee that they get privileged pricing.  They often misrepresent themselves as a “corporation” whenever it suits them.  They hand franchises to people out the side door when a deal too-good-to-be-true shows up and they don’t want to share.  Their “Co-CEOs” live in Detroit and have absolutely nothing to do with the day-to-day.  Their president (Brian Smith) is one of the biggest “whipping boys” that ever walked the face of the earth.  He’ll talk logic and then sell the franchisees down the river when his boss lays down the gauntlet.  Good guy, bad guy to perfection.

How does it work?

1. They invite you to a “discovery” day – it’s the beginning of what they refer to as “due diligence”
2. They give you disclosures and an agreement that is all one-sided in their favor
3. They can change their mind at any time and you have no choice in the matter (just life most UFOCs or FDD as they now call it)
4. They sign you up to a minimum 10 year agreement = the naive are signing 20 year agreements
5. They give you a franchise that is of nearly no value – thats’ why it’s free
6. They control all of your money collections – if you take money, they dump you
7. Here’s the kicker – they take 10% of all of your GROSS – they don’t give a damn about your profits – you can lose money and they’ll take their cut anyway
8. They have their hands down every vendor’s pants.  All of their vendors are in a 2% kickback scheme.
9. If you have a large client, they’ll force you into doing business with their vendors (due to kickbacks) – you cannot push back or they’ll dump you and give your client to another franchise or they’ll simply take it and hand it off to one of their employees who suddenly “chooses to become a franchisee”.
10. This has happened with accounts as large as the United Way and many other Fortune 500 companies
11. The business is one of high overhead.  The average franchise makes about 28% net profit because in printing, promtional and apparel, the product is nearly 60% of the deal.  This only leaves 40% before overhead.  Proforma takes all the proceeds, requires that they pay themselves, then they pay the vendors and then last is the franchisee.  It’s indentured servitude and nothing more.
12. If you make them angry, they take your money and then they tell the vendors to come after you!  It’s another cute little “out” in the contract.
13. A non-compete also keeps you around and from keeping your accounts if you part ways.

Be careful – Nothing of value is FREE!