Currently Franchisors are required to list litigation in the Uniform Franchise Offering Circular, which is against them. Soon they maybe required to list the litigation that they file as well.
Currently Franchisors are required to list litigation in the Uniform Franchise Offering Circular, which is against them. Soon they maybe required to list the litigation that they file as well. In my opinion this is a bad idea all the way around. First of all putting dirty laundry in a UFOC is bad business, the more that is there the worse it is for the brand name and the future franchisees psyche going into a new business. It creates fear, it closes communication; if the franchisor is required to list the litigation that they file then, it makes the franchisee more apt to hide problems during franchisor visits to the franchised outlets, it is not good. It is dangerous to the enforcement of the quality and consistency of the system. Some franchisors never sue their franchisees, I have always taken this tact, however such a requirement for disclosure would mean I would want to file a bundle of lawsuits to show my willingness to enforce my system.
Having a little bit of litigation history which is relevant to the future ability of the company to fulfill it's duties might be worthy, probably not, but possibly. Perhaps a little history might be of value, but it is not that big of an issue really. Second off I have never filed against a franchisee in our franchise, but if the franchisees know that, well then they will take advantage of the franchise relationship, it is human nature. There are numerous times I have let a franchisee off the hook, because it seemed like the right thing to do and because I did not wish to spend my time or money in court or paying attorneys, as they have never done anything positive for franchising. I usually chock it up as experience and move on, besides the time is better spent moving forward, building creating and uniting, that is where the strength is in franchising.
Now then if the Federal Trade Commission in their newest rule making session determines that this rule is to be enacted, my franchisees and future franchisees will know that we are push overs, that even though our franchise documents have teeth of steel, we never file any lawsuits. So if it enacted, then I will go out immediately and start some lawsuits and sue franchisees who have violated our contract and gotten away with it. I will have to pick a case I can win easily and quickly for a high dollar amount. I can think of several. I have every right to do that and I will when and if this rule is changed, so then I can include some litigation filed by the franchisor in my documents. These folks I will be suing are the Federal Trade Commission consumers, which they are suppose to protect and they are toast. Is that what the FTC really wants? I guess it employs more attorneys in the world? Isn't it better to work things out? But if the franchise documents have no litigation from me, then I guess I better get some to show strength as it is a common and well known fast it is best to negotiate from a position of strength. The FTC is getting in the way of the Frachise Relationship each and every time they add more disclosure. It hurts consumers and they either know or should have known that and therefore should be disgorged of their ill-gotten jobs.
If a franchisor is thought to be weak, then the system can too easily be torn down, by bombarded with renegade franchisees and forming of Franchisee Associations (unions). Isn't that why the Federal Trade Commission files cases against franchisors? I mean you have documented no fraud in franchising, yet the FTC is filing cases, to show strength right? Isn't that why they grandstand in the media all these cases yet never fix the real issues? Examples: Runaway Identity Theft, SPAM, Spyware have all increased since the Federal Trade Commission got involved. The FTC should not be let off the hook for dereliction of duty, no matter how many cases they file. I think the problem is really at the Federal Trade Commission not the franchising community; we have documented this in our letters and comments. Aristotle talked about this in the Republic' of making examples of people often to keep control, yet isn't it easier to come clean at the Federal Trade Commission, de-regulate franchising and go find some real fraud, such as that which is common and well known? And really my SPAM is still increasing every week. Think on this.
"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs
