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

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

Why “Subway is the biggest problem in franchising….Dean Sager”

Though this report was written some 10 years ago (and Fast Food Nation in 2001-2), the infractions and arbitration have only increased exponentially.  In 2006, Fred took control over all of the marketing funds (400 million) by changing his contracts (was formally under control by the 14,000 member North American Association of Subway Franchises or the NAASF) and now simply markets whatever he thinks will sell sandwiches even if he chooses to give them away for free at the cost of the franchisees.  When they sued Fred in court, his counsel claimed that arbitration was the venue.  The judge told them to “kiss and make up” and let Fred go.  Fred DeLuca has spread his wings to more franchises and invested in others in an effort to heap riches upon himself (billionaire already) while destroying the little guy through his predatory model.–Bloody

The U.S. House of Representatives’ small-business committee studied the franchise industry for six years, and staff economist Dean Sagar concludes: ‘Subway is the biggest problem in franchising and emerges as one of the key examples of every abuse you can think of.’ Says Cliff Marshall, a franchise consultant for more than 30 years: ‘If anyone in my family ever asked whether they should buy a Subway, I would say absolutely not, no way.’

FORTUNE MAGAZINE – MARCH 16^TH 1998

–Judges and juries in several cases have found that the company has conned or misled landlords by using shell companies.

–Legal disputes disclosed in an annual report required by the Federal Trade Commission total 160–more than the combined total listed by Subway’s seven largest competitors (McDonald’s, Burger King, KFC, Pizza Hut, Wendy’s, Taco Bell, and Hardee’s). The number has nearly doubled in four years and doesn’t include 50 cases in Milford, Conn., the company’s hometown, against various dummy entities DeLuca has used to conduct business.

THE LEADER IN LAWSUITS

The FTC requires franchisors to provide prospective franchisees with data about relevant litigation. Here are the numbers of pending and concluded cases* for the eight largest fast-food chains over the past decade.

*Includes arbitrations.

Pizza Hut 4 Taco Bell 5 Wendy’s 10 Hardee’s 25 McDonald’s 26 KFC 28 Burger King 29 Subway 160

From the Mar. 16, 1998 Issue

The defacto standard of publications depicting the true nature of the fast food industry:

Fast Food Nation – Eric Schlosser

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?