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Log In / Register | Apr 21, 2018

Franchising IS an Entitlement Program for Franchisors

The FTC Rule and the State UFOC's (FDD's) are a subsidy for franchisors and an ENTITLEMENT program. Apparently, territory protection for franchisees are a thing of the past and encroachment by franchisors on their franchisees is legal and rising within the industry. Don't know how McDonald's handles this in the saturated QSF sector but all new franchisees are in great danger from encroachment from their own franchisor and HIS competetors. Franchisors want to get "FAT" while making Americans fat. The quick food service market is saturated at the expense of franchisees who are the filling in the sandwich.

I'm not surprised that McDonalds owns most of the buildings and real estate that McDonalds franchisees lease from them because it makes the co-terminus default provisions of the franchise contracts l00% effective and they earn even more profits for their stockholders with their commercial real estate investments. As long as their franchisees have collateral, there is no way that McDonald's is going to lose, ever. At least, McDonald's, through this policy, ensures that their franchisees are in good locations. Quiznos appears to make money in the "location" business and this is another source of income for them.

I'm not angry at McDonald's. Up until a few years ago, I really didn't understand that McDonald's was owned by individual little franchisees and franchisee chains within the big golden arch. Like so many Americans and the Congress, apparently, I was taken in by the advertising and the hype and didn't really understand the exploitive business model and the franchisee-franchisor relationship that is intentionally blurred when advertising to the public. I assume McDonald's doesn't have to churn and turn to survive and that their first owners actually do survive with profits.

I think franchising needs to be exposed for what it is and that the government economists need to look at what franchising is doing to the economy in the long term.


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