Is There A Market for Franchise Reputations?
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Les Stewart has an interesting post about how to regulate the quality of franchise offerings, but using the marketplace.
Governments have a legitimate role in regulating the quality of market transactions as the unfolding worldwide depression will prove (again).
"Without the supporting information framework to reward good and punish bad franchise behavior, the industry will continue to die.
They could do this by:
create a franchisee and franchisor national registry system (just tombstone information run by an independent company),
limiting and registering confidentiality agreements (only for very rare "trade secrets"),
broadly defining what a franchise is,
making every franchise agreement contingent on both sides having independent legal advice (including spouses),
establishing a reverse onus on good faith (ie. when challenged, the franchisor is obliged to prove that they had not acted in bad faith; a much more realistic approach than defining what is "bad" faith), and
requiring lenders to support a private service that rates franchisor' reputations."
What I am most interested in is Les's allusion to the history of the credit bureaus, and how we might obtain a "credit agency" or ranking of the viability of franchise systems.
This is an interesting idea, but we need all of the franchise disclosure documents to be easily accessible, reviewable and for their to be a market which rewards analysts.
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