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FTC Rules[edit]

FTC Rules Favor Franchisees[edit]

The FTC Rule on Franchising acts to protect the franchisors more than the franchisees because there is a serious flaw in the FTC Rule. See and read Burke, D., & II, E. (2002). Franchising fraud: The continuing need for reform. American Business Law Journal, 40(2), 355-384. For a dissertation on "Inducement" problems in franchising. CJKC 29 June 2009 —Preceding unsigned comment added by (talk) 16:38, 29 June 2009 (UTC)

I couldn't find a dissertation on ProQuest related to this topic, although perhaps was referring to this CJKC on WikiAnswers who discussed this topic. Sondra.kinsey (talk) 18:47, 23 July 2016 (UTC)

State vs. Federal Regulation[edit]

Franchising is most certainly regulated at the state level. The only real involvement that the FTC has is to regulate the disclosure documents. But even then, those documents are not reviewed by the FTC. —Preceding unsigned comment added by (talk) 02:02, 27 January 2010 (UTC)

List of Franchises?[edit]

How about a list of Franchises?

Inaccurate information?[edit]

(moved from User talk:Harry Maeda)

There is information on this page that is not entirely correct. I have attempted to change some of the mistakes in franchise early history. It did not start with Howard Johnson's in the 1930s. That is much too late. A&W was considerably earlier, starting in Lodi, CA in 1919. Their owners, Alfred and Walter, stated that they copied the older franchise model of tire companies.

What about Martha Matilda Harper who started a beauty parlor franchise in 1891? (See Wikipedia's own entry on her) (talk) 18:09, 21 October 2013 (UTC)

In regards to hotel franchises in Wales between hotels and bars in the 1850s, this is possible but documents and links would be greatly appreciated to collaborate the claim.

You can find an ongoing project of early franchise history at [the Franchipedia], an online franchise wikipedia project. Your comments there would be much welcome.

This statement is also debatable. "Many retail sectors, particularly in the United States, are now dominated by franchising to the point where independently-run businesses are the exception rather than the rule." An example should be used to substantiate it.

I do not want to declare this page in dispute but would prefer discussing the issues first. —Preceding unsigned comment added by Harry Maeda (talkcontribs) 06:24, 7 August 2006 (UTC)

And my reply to Harry, left on his talk page:
Greetings, Harry. I'm going to move your statements over to Talk:Franchising as that's where I think you meant to place them. Also, don't forget to sign your name on talk pages with four tildas (~~~~). I'd also appreciate your thoughts on what I wrote at Talk:Franchising#External linkspam. Please also remember that you must have sources for your contributions that claim certain facts. Such as your claim that "Franchising dates back to at least the 1850s" -- here above you admit you don't have a source for that claim (print or online). I'm going to also put in the standard wiki welcome, which will give you general links to wikipedia policies and guidelines. Hope all of this helps! If you have any questions, leave a message on my talk page or at Talk:Franchising if it's related to that topic. Thanks! Rkitko 06:31, 7 August 2006 (UTC)
Thanks for the welcome and the link to the Wikipedia guidelines. I will respond shortly. Good to be here. Harry Maeda 13:06, 7 August 2006 (UTC)
We're glad to have you and look forward to a full future of productive edits! I hope you find all of those links helpful. Being a new wikipedian is kind of overwhelming--I haven't even sifted through all of the policies yet. Again, let me know if there's any question I can help answer or direct you to where you might find the answer. Best, --Rkitko 17:39, 7 August 2006 (UTC)


Hi. Hope this works. Just to be clear, I did not say that "Franchising dates back to at least the 1850s." That statement already existed in the article. I asked that references be provided. I've not heard that and have several leaders in the Australian franchise scene that have not heard that. It may be true but providing references would be safest. --Harry Maeda 05:08, 13 August 2006 (UTC)

Oh, I apologize for saying you put that statement in! To be honest, I haven't read the whole article. As explained below, I just watch the page because of heavy linkspam activity. More comments below, I just wanted to apologize up here for that. Best, Rkitko 20:05, 13 August 2006 (UTC)

I've read the Wiki rules. (There's quite a few of them!)I'm waiting for anyone else to respond to your comments.

Point 1. Blue MauMau is a social media or community, much like Wikipedia. However, these are not college kids that are copying news materials that already exists on the Net. It isn't MySpace or Blogger. First, it is a vertical community that has tremendous originality. (See the article on Hospitality Experts Say Market Fine.) On Blue MauMau franchise CEOs (see Editors Note to CEO), well-known franchise consultants and experts contribute articles. The comments such franchise insiders make is highly news worthy and informative. The confusion may occur because Blue MauMau has a blog section, where experts write columns.

Point 2. It has an online franchise encyclopedia, the Franchipedia project, where it is trying to jump start from a business perspective the history of franchising in this country. The Franchipedia project in some cases has copied articles from Wikipedia such as the McDonald's entry so that readers can contribute something from something rather than from nothing.

But there are stark differences. The few franchise entries in wikipedia about franchising tend to be consumer oriented, e.g. "Shamrock shake started in 1970". The Franchipedia project wants to comment more on the development of the franchise business model. As more writers contribute, the few articles in Wikipedia and also in Blue MauMau will diverge because perspectives and aim is different. Most importantly, the Franchipedia Project is a trade wikipedia that is open to all. It doesn't just allow one company to gather, edit and publish information like FranData, Franchise Business Review or You do not even have to be a member of the Franchipedia community to contribute so it is true to Wiki principles of being open to all.

Blue MauMau is trying to work with Wikipedia. These two communities can help each other with relevent articles. For these reasons and more, my suggestion is that an external link to the Franchipedia project be listed to encourage people to contribute to its body of business knowledge.

Franchising Errors and Gaps: Whoever is contributing to the Wikipedia entry, there are big pieces of franchising that are not quite right or that are missing. There is little mention about the beginnings of modern business format franchising. Until I came last week, you actually wrote the first modern franchise was Howard Johnsons in the 30s. There's no mention of such basic franchise concepts as "churning", "retrofranchising", and much more. An open franchise wikipedia can help Wikipedia get its own facts straight through franchise consultants, experts and CEOs.

Harry Maeda 05:08, 13 August 2006 (UTC)

Retrieved from ""


I'm gone through this article one more time to find many errors. (1) It describes only business format franchising as "franchising" hence, overview, advantages and disadvantages sections are misleading. (2) Many minor areas that mislead, such as the origins of the word,"Franchising (from the French for free)". That's technically correct but misleading. Reader needs a better understanding of the French word "Frank" from which franchise has been derived. (3) Legal aspect such as major cases impacting business format franchising are missing. Dates and explanations are not correct.

Harry Maeda 17:32, 13 August 2006 (UTC)

Harry, this is excellent that you're locating errors and wish to make this article better! I'm glad someone is finally taking an interest in this topic. I admit I know next to nothing in this realm--I just keep this page and Corporate social responsibility on my watchlist because both tend to have high linkspam (see also: Wikipedia:External links#Links normally to be avoided) activity.
I agree that wikipedia should pay attention to other wikis, and it does (for example, the Star Trek page has a link to the Star Trek wiki). But, like Wmahan said above, it appears that BlueMauMau is somewhere in the grey area between a blog and an authoritative source. In my surfing on that site, I haven't noticed many articles that are using citations of where the information came from. Usually, I try to obtain the original source and cite it instead of a secondary source (like a website citing an academic article). Other guidelines that might be helpful here that you may not have stumbled upon:
Specifically, as you add new information or verify old information, try to use the new "ref" tags, which are explained here. And if you're like me and need to see these tags in action in a real article, I have implemented them in the Triggerplant article--so check that out to see how the wikitext/html works and produces the references. I'll certainly help you with the technical kinks, but since I don't know much about the subject here, I won't be of much help with the text. Hope all of this helps. Let me know if I can answer any questions you have. Cheers, Rkitko 20:01, 13 August 2006 (UTC)


You guys are way, way off on this. The entries to the history of franchising and external sources are not from a spambot. They link back to a site that seems to be largely a guild of franchise CEOs, Presidents, VPs and experts yet you call their articles and columns to the industry a personal blog that doesn't meet Wiki standards. (T'aint so, not according to the standards that you cite). The site isn't a single blogger or person trying to promote themselves. It has almost no advertising and it is not a corporation trying to promote itself. The Franchipedia section on the cite is obviously an open, growing, free encyclopedia specializing in a trade. It links to primary sources, which includes original participants in the growth and history of 20th Century franchising who share original stories (such as the KFC first franchisee story), and yet you say that it lacks originality and that it does not cite enough secondary evidence.

This is crazy thinking for building the knowledge of the history of companies and an industry. I guess it has to be done by future students of the next generation who have the time and the technical Internet skills (or whatever it will be then). Apparently if these CEO / authors write it on the Franchipedia now, it doesn't count as far as Wikipedia is concerned. Good luck getting experts. You've turned me off.

Cliff Landon 20:40, 17 August 2006 (UTC)

Sir, I never said the external links were generated by a spambot. Linkspam can be generated by a real person (internally: excess intrawiki linking or externally: linking to a site specifically to promote it). Notice above the ambiguity over the intent for placing the link on this article.
As for verifiability, how can we verify that the content of BlueMauMau is indeed written by these CEOs, VPs, and Presidents? Personally, when I'm citing sources of information, I trust print sources or official websites (most likely official annual reports and the like). I looked again through the site and the only articles I ran through that cited any source at all were the ones copied from Wikipedia. I never said the entries on the Franchipedia lack originality. And from what I've seen, they don't cite any primary, secondary, or even tertiary literature. I admire what they're trying to do over at BlueMauMau, but we can't use them as a verifiable source of information just yet.
One more thing: Wikipedia, mostly, does not rely on "experts," though we have quite a few. A well-researched article can be written by anyone on any topic. For example, I know little about AI and computer technology or fractals, yet I wrote the entry on TechnoSphere, citing primary sources (published personal accounts of the people involved, newspaper articles, peer-reviewed journal articles, etc.). I do wish that, instead of disagreeing with Wikipedia policy and my opinions on this matter, we could move forward and expand this article with accurate information. And please do remember that I am but one Wikipedian--do not judge the entire site by one person's actions or opinions. You can certainly ask an admin to review the situation for you, if you wish. Just place {{helpme}} on your talk page with an explanation and link and they will help out. Best, --Rkitko 01:34, 18 August 2006 (UTC)


Rkitko. Yes. I see the article and the nomenclature to reference a work. I'm not much of a programmer. I'm a busy business guy. I'll look at how to do the referencing and Wiki nomenclature a little more though to see if I can grasp it. I might have to leave this to younger folks than me.

Harry 01:25, 18 August 2006 (UTC)

I can certainly help you with the reference "tags". As you add information, just place the reference in parenthesis (at the end of a paragraph or particular statement that came from a specific source) and then I'll run through the article after your contributions and apply the ref tags. Unless, of course, you want the practice at it. Let me know if there's anything else I can do to help :-) Rkitko 01:34, 18 August 2006 (UTC)

The section that lists the various components of the Franchise Agreement confuses the Franchise Agreement with the UFOC. For example, items 2 through 5 are elements of disclosure, not contract.-- 16:59, 30 July 2007 (UTC)

The Legal Aspects section contains inaccurate information about the Franchise Agreement. Specifically, it confuses aspects of franchise disclosure with franchise contract (Sections 4 and 5, "Litigation history" and "Bankruptcy history" are elements of disclosure, and have no place a Franchise Agreement, which is a contact). I do not know how to solve this problem without removing the offending section or retitling it, so I wanted to post my concern first.-- 15:36, 22 August 2007 (UTC)

Go ahead and remove those items from the list which are not normally a part of the franchise contract. If you want, add a paragraph about franchise disclosure, with the normal elements listed separately. Argyriou (talk) 16:29, 23 August 2007 (UTC)
I added a paragraph clarifying the issue as well as a list of common Franchise Agreement points. I also properly retitled the original list as clauses found in a UFOC, not Franchise Agreement. I have researched many franchises for my job, and have read many UFOC's, Franchise Agreements, and other literature pertaining to the topic. As a result, however, I could not think of any authoritative source besides the documents themselves, which isn't practical. Therefore, the new information is still in need of proper sourcing.-- 17:43, 11 September 2007 (UTC)

Advantages ---Less Chance of Failure[edit]

This "heading" is misleading in itself. As per the quoted source in this section, even the Internation Franchise Association has disclaimed that franchising is less risky than independent businesses. This is not "neutral" and just misleading. Perhaps, Chances of Failure would be a more accurate heading since there has been no consensus one way or the other on the matter of whether or not franchising is less risky than starting you own business. This subject in itself is a red herring to divert the attention of the buyers of franchises as to the risk of failure, as demonstrated by the performance of the ex-franchisees and the current franchisees of franchise systems.

CJ KC —Preceding unsigned comment added by (talk) 21:17, 22 December 2007 (UTC)

Thanks for starting this discussion. I haven't looked at the article in a while, but it seems like the advantages and disadvantages sections are not sourced at all, and the "LCoF" subsection has a source that's not easily checked. If we can't find sources that meet WP:RS, i.e. not associations, Entreprenuer advertorials, company/consulting websites, etc., then I say we should remove the sections completely. Flowanda | Talk 21:52, 22 December 2007 (UTC)

Thanks! One of the greatest disadvantages of franchising that isn't indicated under the Disadvantages is that franchisees are not promised profits and can stand and must often remain standing at breakeven status the entire duration of the contract with NO profits because under the terms of all franchise agreements, they will lose their investments if they don't pay their royalties and if they don't service their debt, and if they terminate early. Unlike independent businesses, an owner of a franchise can't just negotiate with his Landlord and close up an unprofitable business. Break-even franchises that operate with cheap labor do feed the profits of the franchisors who earn their royalties on gross sales of the business of the franchisee when the franchisee is operating at a LOSS, a PROFIT, or BREAKEVEN. This is a great disadvantage to franchisees who can be indentured in low paying jobs in breakeven businesses for the entire term of the contrac. This is the great advantage for the franchisors who can grow their profits and reduce their risk because it is the franchisee whno puts everything at risk when they build and finance the physical unit that wears the brand name. CJ KC —Preceding unsigned comment added by (talk) 00:42, 23 December 2007 (UTC)

Why does this article contain an "external link" only to the IFA and not to the AFA or the AAFD? CJKC —Preceding unsigned comment added by (talk)

In most cases the answer to questions like that is that nobody's done it yet. Do you have links?LeadSongDog (talk) 19:20, 27 December 2007 (UTC)

I think that some of the advantages of franchising that have been removed should be put back in, but perhaps by clarifying that they are "perceived" advantages of franchising. Whether or not a franchise is verifiably less risky than an independent business is to some extent irrelevant if there is a perception that this is true and this perception influences potential franchisees to buy franchises. There is certainly merit in the article explaining why people by franchises, even if their reasoning if not necessarily correct. For a source for advantages (and disadvantages) of franchising (whether perceived or real), see the Franchise Council of Australia( or the International Franchise Association's fact sheet ( These may not be completely independent sources, but they are an authority for what perceptions exist in the franchise industry. Incidentally, the Franchise Council of Australia's annual survey reports, among other things, that only 2% of franchises ceased to operate in 2005 (as opposed to being transferred and that franchisees remained in the system for an average of 7 years ( Jubm (talk) 23:06, 20 May 2008 (UTC)

Can you make a case for using them as a Reliable Source? I can't see how they could be.LeadSongDog (talk) 01:29, 21 May 2008 (UTC)
I have changed LeadSongDog's comment to link to WP:RS instead of to transclude the document. (That is, from curly braces to square brackets.) This may improve the legibility of the page. WhatamIdoing (talk) 03:40, 2 September 2008 (UTC)

The first line that "Franchising is the practice of using another firm's successful business model" has no citation, and is a conclusory beginning which is simply not true to the extent that "success" is required in all countries. For example, in the United States there is no requirement that a business model be "successful" and there are instances of concept franchises, instances of franchises where 70% of franchisees were losing money, et cetera.

For many of the same reasons, the statement that "The franchisor's success depends on the success of the franchisees" is also presented without any supporting authority, and is also false. In most franchises, the franchisor's success depends on (1) the ability to sell new franchises and/or (2) the gross sales of the franchisees. It is not uncommon to have the franchisor do well financially despite franchisees not doing well.

Over the course of time, this article has dropped citations to sources which disagree with the industry groups (IFA/FCA). The resultant bias is unfortunate, though this problem is one which Wikipedia in general has never developed a mechanism to deal with. (talk) 04:04, 16 June 2013 (UTC)

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