International Law

Franchise Investigation Revolutionized

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Don Sniegowski, editor of Blue Mau Mau, has a fantastic development about franchise investigation.

"A new database of free and searchable online franchise documents has been launched today.

The site searches financial statements, franchise agreements, franchisee litigation against franchisors and more by accessing more than 3,200,000 franchising related documents from the public records of California's Department of Corporation's online database system for franchisors that register in that state.

The difference is that the OpenFran.org library takes a simple image pdf, which are are not capable of content searches because they are similar to photos. And the site converts and stores these disclosure and registration documents into some 41,000,000 plus words.

These words are fully indexed and searchable through a Google-type Boolean search interface."

This is an amazing project, and I have been invited to particpate in the beta launch.

Let me explain why this is so revolutionary.  Up to now, franchises have been sold largely through trade shows and franchise internet portal sites.

By the time the individual gets to a professional, they are so hyped on the "proven business model" nothing short of a heart attack can stop they dropping $300k - $500k on some worthless franchise.

Such is the great Humean vivid connection between McDonalds and Franchise, that the naive prospect is postively gidy thinking about how much money they will make franchising.

The sober reality, which hits about 18 months in, is that retail is hard work.  For not much money.

Franchising can be a wonderful opportunity - but right now, as Barry Minkow is fond of say, the franchise fraud is a sausage stuffed with lies covered by a skin of truth.

Franchise fraud is enabled because individuals don't get proper counselling before they attend a trade show and because there is no discrimination by prospects.

What the OpenFran.org site does is this: it will allow me to screen out hundreds of franchises by certain criteria that I have constructed.  

Want to see all the franchises with earnings claims - bam, do this clever search and up they pop.

Want to see all the franchises with acceptable levels of churning?  A little harder search, but bam up they pop.

Want to compare the advertising arrangements of 5 QSR franchise systems. Easy search and up pops the relevant data.

I am going to play around with my account and report the pros and cons of this beta, but make no mistake about it: OpenFran.org is going to bring a lot of transperancy to franchise purchases at a very affordable price.

Full post as published by Misleading Advertising Law on September 09, 2008 (boomark / email).