THE ULTIMATE FRANCHISE

By Seamus Muldoon, Himself
 Copyright © 1997-2010
All Rights Reserved

 

     We are so concerned with keeping abreast of the pace of change in every aspect of our lives, that we have scant space or strength for reflection. Great thoughts and concepts are not usually born of frenzied hyperactivity. They come from reflection, distilled over time, and sometimes from other things distilled over time. Before computers, the Internet, cellphones and beepers, fax machines, copiers, cars, airplanes, when going from New York to Chicago could take weeks, time spent afoot or on horse or camel back produced the great fundamental core concepts that control all things to this day.

     Why, you ask, is he getting into this bullshit? Recently I received a franchise disclosure package over a hundred pages long. The document, which included the franchise agreement, the attendant subleases, consents, financing documents, assignments, guarantees, waivers, disclaimers, state specific information pages financial statements, directory of enforcement personnel, receipt form, et cetera, caused me to recognize how absurdly a fundamental relationship can be described if you have enough money to hire a room full of lawyers to fulfill the mandate to create an instrument to govern a ten year relationship in a changing world in such a way that all options are yours; all doubts are resolved in your favor; all disputes are handled in private, with no risk of jurors, punitive damages, physical or emotional injury liability; and a penalty for defection no less than deprivation of the right to earn a living.

     Halfway between the theophany on Mount Sinai and the present day, the philosopher Moses Ben Maimon wrote that, to be sure of the meaning of a covenant, it must be written in both the negative and in the positive. It is not sufficient, according to Maimonides, to say that you and I agree that on next Thursday you will pay me $ 100 and I will fix your car. You must also add that if on next Thursday you fail to pay me $ 100, then I will not be obliged to fix your car. To this the Order of the Coif draftsman now adds, that the payment of $ 100 is a condition precedent subject to waiver which can only be in writing in the form set forth in Exhibit C; that all implied warranties are specifically disclaimed; and that there shall only be a limited warranty as set forth in Exhibit D; that the $ 100 must be in U.S. currency; and that you acknowledge that you have not been induced into this agreement by any representations or promises not specifically contained in this totally integrated writing.

     I know people who, without having to look anything up, could easily add forty more paragraphs to the expression of an agreement to pay $ 100 to get your car fixed. Draftsmanship has become a form of littering caused by people who never grew past the anal stage, and whose contracts read like a smeared wall. Woe unto you Doctors of the Law !

     The founder of a franchise company, who shall go nameless here, once speechified that a franchise agreement should consist of two pages. Page One would be entitled "Obligations of the Franchisee", and would simply say that the franchisee shall pay the fees and royalties and do as he is told. Page Two would be entitled "Obligations of the Franchisor", and would be left blank. The idea is that the franchisor has the expertise to know what should be done from time to time and should never be hampered by contract language.

     Somewhere between the supercilious verbosity of today’s franchise documents and the tyrant’s arbitrary blank page, there could be a document that describes a precedential relationship, the history of which has been reflected in the development of franchising - ergo, proof of relevance. If, in the mists of antiquity, such a document exists, why not just adapt it and use it? The cynical answer is that one cannot charge much for simply reproducing a document long in the public domain, changing only the names of the parties. While I know of one franchise consulting company that has been doing just that for years, I would suggest that in this day of value billing, resort to such a document could so rationalize the franchise industry as to be worth a fortune.

     As some of you know, it once came to me to search this path in the context of establishing a company for the purpose of franchising synagogues. As part of my due diligence, I asked to see any marketing or other strategic documents the client had prepared. Before explaining to you the structure of the franchise agreement I prepared, it would assist you in understanding my purpose to know what it was he had in mind.

     Like all franchisors, this client insisted that his concept was the product of divine inspiration. There was the core synagogue concept with three franchised divisions, orthodox, conservative and reform. Later, problems arose with a few franchisees claiming that reconstructionist and humanistic synagogues were not included in the scope of the franchise, and who were not reporting sales or paying royalties on those operations, but we put a stop to that. Each of these synagogues had its own layout plan. In the orthodox franchise there had to be two kitchens to comply with the dietary laws, segregated gender seating, either on the same floor with a curtain or with the women seated in the balcony. It also had a womens’ ritual bath in the basement with a Jacuzzi. The other divisions had co-ed seating, one kitchen, an organ and choir loft and no ritual bath. The reform synagogue division layout also featured tennis courts and a swimming pool.

     The franchisor handled all construction, and at closing it was a turnkey operation, complete with prayer books, religious tracts and scrolls, hymn books for the conservative and reform, prayer costumes, including shawls and beanies (except for the reform), and a fully stocked gift shop. While the orthodox gift shop had an inventory limited to books and religious garb, and nothing with pictures to guard against violating the prohibition of graven images, the reform gift shop had an extensive inventory of Chagall prints and Israeli handicraft. All re-orders were tied in to enhance the franchisor’s revenue expectations. There was no antitrust concern about this, because, since every religious sect claims that it is the only true faith, there remained adequate inter-brand competition.

     The initial thought was to avoid having to comply with franchise disclosure laws, on a separation of church and state rationale or by calling people rabbis instead of franchisees. However, in view of the many recent convictions of televangelists for prayer fraud, it was decided that we better have a UFOC.

     One of the franchisor’s primary concerns was adequate documentation of franchisee income. That required formal billing for membership dues, pledges and assessments and payment by check or credit card. There were to be no loose plate collections, because all that cash only leads to skimming and under reporting. Sunday school and religious school operations were included in the franchise, subject to royalties, as were other peripheral services and activities, such as bazaars, rummage sales, weddings, bar and bat mitzvahs and ritual circumcisions, as well as golf, tennis and swimming lessons. The operations manual contained several alternative methods to recycle the product of circumcisions.

     I was drawn to consider this drafting assignment in the light of biblical precedent. Now it so happens that every new religion goes through the early development stages of feasibility analysis, test marketing (My God can whip your God’s ass), and de-bugging, evolving into some semblance of a coherent mandate over time. And so it was that I looked towards the mandate on Mount Sinai, which had, as has been said of the Sherman Antitrust Act, a constitutional vagueness that facilitates its application to the circumstances of an evolving world. The problem is that imagination and analytical insight are required for its future beneficent interpretation - the ultimate terror of the anal compulsive personality, who values the quantitative at the expense of the qualitative, and whose documents purport to micro manage inconsequential aspects of human existence. Some of their number, fearful and insecure about the loosey-goosey ten commandments, searched the old testament for every possible divine instruction, ultimately announcing that there were, if one looked carefully enough, 613 commandments, not just ten.

     This seminal event was the precursor of today’s typical franchise agreement, so rife with specific positive and negative covenants that one’s entire life can be consumed keeping track of them, with no residual energy to run the business which the document was supposed to serve. Of course, it started an entire area of consulting for experts in how to comply with franchise agreements. Thus the lawyers’ view of the assigned task - to create a document under which the signatory parties cannot operate without frequent resort to legal counsel. Is it any wonder that transactional lawyers are always complaining about an unsatisfactory sex life?

     I believe that the Mosaic experience is ideally suited to franchising, and so this contract, after the ritual whereas clauses, provides as follows:

1. I am your franchisor.

2. You shall affiliate with none but me.

3. You shall use no symbols of identification without my consent, and shall not ill use those which pertain to me.

4. The day upon which reports and payments are due is holy, and time is of the essence.

5. Your tenure in this relationship will be terminated if you fail to honor the proprietor.

6. Do not kill the goose which has laid this golden egg.

7. Do not consort with any alternative opportunity.

8. Do not under report.

9. Do not short remit.

10. Do not seek the privileges of others who are not part of this franchise.

     In its concluding recital, inspired by Exodus, Chapter 20, Verse 24, the contract provides that:

     "You will regard my position and authority in a worshipful manner, and shall bring to me peace offerings and other tangible assets so that I will continue to bestow my name upon that which you do."

This is followed by dates and signatures.

     Shortly thereafter, I was enjoying with some friends an absolutely delicious bucket of extra spicy Popeye’s fried chicken, when they decided they wanted to franchises churches. But that’s another story. 

 


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