A Franchise Fable


One fine day, a franchisor, an area developer, and many franchisees decided to build a franchise system together.

They found many good locations and built a great number of units.

The franchisor asked the area developer to divide up what they had accomplished together. So, the area developer made up three roughly equal parts and let the franchisor chose, which part was his.

Angered by the area developer's lack of grace, the franchisor terminated the area developer and retained all the area developer's units.

After that, the franchisor told the franchisees to propose a division of all that they had accomplished together.

The franchisees put together the vastly greater part of all they had accomplished together in one pile and in the other they put only scraps. When they had prepared the two parts, they called the franchisor and invited him to choose.

The franchisor, quite delighted with this arrangement, took the vastly greater part of all they had accomplished together and said to the franchisees.

"My esteemed colleagues, who taught you to divide things up so well?"

And the franchisees answered, through clenched teeth.

"None other than the area developer, and what happened to him, sir!"

And with the scraps, the franchisees rushed off with their tails between their legs to bitterly complain, in some small far off location where the franchisor could pretend not to hear them.

Moral: Partnership with the economically powerful is untrustworthy. If you want an "economic partnership" with your franchisor, start form a for profit owners association & start bargaining from a position of power.

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