Can an empire be saved by shaming investors like Ariel Buk?

August 15, 2010

There are costs involved in maintaining investor confidence and commercial relationships. Some people need to learn to “take one for the team”.Ariel Buk and Sonia Karabin may need to understand that they should cool down, be quiet and go away about losing a $85,000 deposit on a non-existent Ontario, Canada franchise. They and, by extension, the many hundreds of other “failed franchisees” need to be taught their role in this confidence game by the industry stakeholders: take one for the team or risk being shamed.

1. James Daw presents the story in yesterday’s Toronto Star article,  Ice cream dream becomes nightmare about Mr Buk’s experience with Piazza Gelateria and Café. This is shrewd. For example, Mr. Daw opines:

They [husband and wife] should have looked more closely at the business opportunity, and their decision to use mainly borrowed funds after Buk had lost his job.

They should have considered the minimum $300,000 cost of a lawyer to sue for a refund if things went wrong, and the chances of recovering anything from a relatively young numbered company.

2. Robert Cialdini lists authority as one of Six Weapons of Influence. My experience is that attorneys are given a  lot of authority by new Canadians. Many of us see past their pretensions, BS and fear. [Examples of authority.]

Ben Hanuka of Davis Moldaver LLP is quoted as saying:

“Very few mom-and-pop franchisees ever go to that length (of hiring experts to research a franchise opportunity),” says Hanuka. “It sounds too complicated to them.”

All it well with the world the reader is assured. Go back to sleep because these people get what they deserved. The blame lies with:

  1. the anonymous, individual “other” (mildly retarded immigrant scapegoat) deserved what he got (“your success follows from your blind obedience to authority” dogma)  and not that
  2. stakeholders align their self-interest in maintaining a facade of legitimacy: not a fake, or a Potemkin village scheme which has preyed upon identifiable groups, in plain sight,  since at least 1971.

Social Psychology-based Hypothesis: Elite stakeholders deflect systemic wrongdoing by using the largely-internal mechanisms of On Cooling the Mark Out by Erving Goffman (shame-humiliation effect) while using the public’s widespread fallacy of the Belief in a Just World, BJW (Melvin Lerner, retired University of Waterloo, Canada) in the country’s largest daily newspaper.

Every dying empire resorts to displays of public humiliation.

Why were people crucified in Jesus’ time?
Crucifixion was a Roman custom used on the worst malefactors and rebellious slaves. Judea was a tributary to Rome at that time. It is recorded by the Jewish historian Josephus that after the last rebellion of the Jews and the capture and razing of Jerusalem, the countryside was practically denuded of trees the Romans crucified so many. WikiAnswer

Detail: Crucifixion was often performed to terrorize onlookers into submission. Victims were left on display after death as warnings. Crucifixion was usually intended to provide a death that was particularly slow, painful (hence the term excruciating, literally “out of crucifying”), gruesome (hence dissuading against the crimes punishable by it), humiliating, and public, using whatever means were most expedient for that goal. Crucifixion methods varied considerably with location and time period…

While a crucifixion was an execution, it was also a humiliation, by making the condemned as vulnerable as possible. Although artists have depicted the figure on a cross with a loin cloth or a covering of the genitals, writings by Seneca the Younger suggest that victims were crucified completely nude. When the criminal had to urinate or defecate, they had to do so in the open, in view of passers-by, resulting in discomfort and the attraction of insects. Despite its frequent use by the Romans, the horrors of crucifixion did not escape mention by some of their eminent orators. Cicero for example, in a speech that appears to have been an early bid for its abolition,  described crucifixion as “a most cruel and disgusting punishment”, and suggested that “the very mention of the cross should be far removed not only from a Roman citizen’s body, but from his mind, his eyes, his ears.” Wikipedia

Humiliation is the most unpredictable, violent and destructive human emotion. It can result in many types of loss (see Bob “Bhupinder” Baber, WikiFranchise.org)

Too bad about the Toronto Star

March 24, 2010

The Star used to write excellent franchise investor stories.

Dozens of them I’ve captured on WikidFranchise.org. They were instrumental in getting the Wishart Act in force. The business section followed something called The Atkinson Principles.

But everything changes, I guess, even social justice.

Seems like the ongoing carnage isn’t newsworthy to Canada’s largest daily newspaper since they became a member of the Canadian Franchise Association in 2001.

The winners write history

March 17, 2010





Franchising has only been briefly profitable for most investors.

Those days are long gone, although the propaganda persists.

Is franchising all “bad”?

January 11, 2010

No, of course it isn’t.

But this “good”, “bad” discussion is beside the point and dangerously misleading.

Useful Model

Franchising is a technology.

Franchising (like all technologies or media) extends man’s abilities, like an automobile, chair or book.

As a technology, franchising is influenced by individuals but it also changes them as the same time.  ie. I watch TV and (in a way) television watches me (influences, opportunity costs, passivity, consumerism).

My interest is in the consequences or effects of the technology of franchising: what it does to people and institutions.

That high quality and low quality (unsustainable, predatory)  franchising exists doesn’t matter much, in the bigger picture. Whether it’s 90/10, 60/40…whatever ratio: that’s is of only minor consequence

The effects of franchising are much, much more complex and long-lasting than the individual financial “score cards” would lead an outsider to suspect.

Franchising brands you.

Is your paper boy a franchisee?

January 6, 2010

Maybe yes, Maybe no.



  1. employee:employer,
  2. independent contractor and
  3. franchisee:franchisor.







A clever card trick:



The underlying abuse has not been solved:



No wonder only fools as I read these papers anymore.

Too bad.

If we forget, We will continue to repeat our mistakes

August 4, 2009


A wiki‘s strength is in its volunteer editors.





Good grief.








  1. Cannon fodder,
  2. Desperation causes bad decision making,
  3. False hope,
  4. Financing with 401k money is totally reckless,
  5. International Franchise Association, IFA,
  6. Only one side presented,
  8. Professional journalistic standards,
  9. Retirement savings gone,
  10. Severance package financing dream,
  11. Sold during time of psychological vulnerability, especially unemployment,
  14. Unproven business model,
  15. Unskilled and unaware of risks, and
  16. Who pays for the research?


  • This article is just plain cruel.


WikiFranchise.org is a revolutionary tool for those willing to use it.

Deer: Are We Trade Show Activists?

February 13, 2009

wolfdeer5A good question but a better one is:

Can we afford not to understand how we got roped into a losing deal?

I think you better Get Smart or you’ll find yourself on the wrong side of the next buffet.

  • In confidence games, it’s a fact that more than 50% of the chumps are good for at least a 2nd fleecing.

I took a look at a trade show advertisement this week and the posting was picked up on Michael Webster’s weblog.

Anyone who contacts me is invited to join me in interpreting how a trade show works. Live.

It is a very sophisticated and well-thought out selling environment that is used to qualify candidates; economically but mostly psychologically.

Your lack of awareness of the dangers [ignorance?] is really your admission ticket.

The first step in protecting your family is education.

I’ll be relying on the Six “Weapons of Influence”: social proof, authority,commitment and consistency, reciprocation, liking and scarcity. Bring your copies. You’ll get a tutorial on not only the Science of Persuasion but on relevant cognitive biases (especially confirmation), The Tipping Point, behavioral economics, Theories of Unusual Events and Risk Homeostatis, heuristics (eg. human thinking shortcuts that usually help us but sometimes result in catastrophic errors) and 10 years of intense industry analysis.


  1. We’ll go over the basic confidence game role structure and process: house, roper, inside man, shill, chump, fixer, etc.
  2. Why it is so critical to have independent legal advice before you sign (goes double for deals less than $20,000).
  3. The selling value of comparing (anchoring) a new system with the best, most successful franchisor: McDonald’s.
  4. What something called “Prospect Theory” has to say why you will stay in a losing business much, much longer than you could ever imagine.
  5. Why you should only sign when there is an Independent Franchisee Association, IndFA present (versus the lapdog Franchisor Advisory Council).
  6. We’ll decode the hidden messages within the marketing material (worked for an advertising design studio + Ivey MBA + McLuhan disciple).
  7. I’ll explain the role of the current SME loan guarantee program.
  8. Why Canada is a safe harbour for white-collar crime.
  9. How this recession is shattering the conventional wisdom that franchises sell better, the worse the economy gets [HINT: new sales, now, are the worst on record].
  10. Why the hook has to be planted in the male first.
  11. How shame is invoked to silence particularly new Canadians.
  12. Why exceptionally thorough pre-sale due diligence is much more limited than you think and could in fact increase your chance of business failure.
  13. The role of the expert seminar.
  14. Why the most rational and dodgiest should absolutely force a copy of Ontario’s franchise law into your hands.

All of these fraudproofing skills are entirely understandable, applicable to many situations and will last a lifetime. I was taught by the best.

In these days of Bernie Madoff, BIM, CitiGroup, etc., I don’t think you (or anyone you know in the traditional or new media) can afford to turn not to learn more about the Science of Persuasion and applied psychology.

Offer to Sellers: You can join us as well. I will gladly discuss my views in front of anyone, at anytime. These persuasion techniques have been proven scientifically and it’s time that more people understood how skillfully they are applied in franchising.

If I were in your shoes, I’d much rather guarantee us free rein rather than be seen to be resisting evaluation. That old hand-in-the-lens shot sells television shows but is, by its airing, basic proof of guilt.

Consumer education is good and only the fraudsters have anything to hide.

Cost?: Nothing

Just call me at 705-737-4635. Bring the whole family. les.j.stewart@gmail.com

PS: Do me a favour: Sign up to receive each new post (see top right, RSS feed). FranchiseFool is now read in 44 countries. Not bad for a single Canuck in one year, I think.

— UPDATED for Fall 2009

%d bloggers like this: