Over Disclosure Hurts Businesses
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Many investors and business ethics professionals are calling for more transparency and regulators are calling for more disclosure. Yet in the franchising industry this can spell disaster indeed. Often Competitors seeking information about companies will collect these documents and use it to the disadvantage of franchising companies.
In my company we have done extremely well on the Internet in attracting people who want their car washed, we are well spidered on the search engines for key words, partly because our websites have been up prior to 1995. We are there to get a high number of website visits or hits; we have exceeding 1 million visits per month on many occasions. Many times people in the market sector of car washing will come to our site after searching the words that categorize their industry. They look through our site and then they find the opportunities page, and think to themselves, hmmm? These competitors then fill out the online form without revealing that they are already in the business and actually competitors.
The FTC's online complaint form also draws many such people to file complaints; few of these individuals represent legitimate grievances. In the case of our company, The Car Wash Guys, like Ray Kroc who never sold franchises to those previously in the restaurant business, we will not sell to those in the car wash business. We believe that they have ingrained in themselves their way of doing things, which is incompatible with our system and methods and of course we feel are quite inferior to our business plan developed over 27 years. Had such competitors were as well developed as they would be franchising as well. These competitors ask us questions thinking the can copy some of our idea, so they call up, email, and start asking questions. Sometimes about five minutes into such a conversation we often know they are not real, but not always. They are too knowledgeable about the industry and they usually slip up in one of their questions or just have to tell us how great they are and how many cars they are watching, so giving them away.
The Car Wash Guys like many franchising companies are in a really ugly and highly competitive industry, almost as bad as the garbage business before the massive consolidation by Wayne Hiezenga or trucking prior to the days of de-regulation. Luckily that comes with intense egos from independents and not a whole lot of smarts. Why should The Car Wash Guys send out a UFOC to a possible competitor when the UFOC they receive could be copied and a few changes made and potentially save them $ 35,000 in legal fees and take away from a practicing attorney (who pretended to work their butt off , when paralegals do all the work and they use CD ROMs and Boiler plate clauses). These attorneys often claim to be decent and hard-working professionals on the ABA Franchising Forum as they try to put a lock on their industry from those who might advise in a similar capacity?
The UFOCs cost to send it out is just about $ 8.00 (including postage) and if those competitors realized I had to send them out they would have every one of the industry's 19,000 tunnel car wash owners across the country email us. So what is $ 8.00 times 19,000. Oh and there are about 35,000 estimated coin-op car washes too all of which are direct or indirect competitors of the Car Wash Guys (the only mobile car wash franchisor in the country). The UFOC contains estimated number of projected units and all kinds of information we do not want out. We are not a public company and until we know who is asking we prefer to keep our information close to the vest, as the competitive markets are not the level playing field we are led to believe as we study business in our educational institutions. Too bad the Federal Trade Commission can not see this obvious fact. By keeping information secret we protect our current franchisee team members (consumers) from lose lips sink ships syndrome. Why add competitive disadvantage in the market place to our team against competitors we should not have to disclose information since they are independent businesses.
The Federal Trade Commission fails to understand the extreme competitiveness of the marketplace, they fail to see how these individual individualized units, who are small business people and the Federal Trade Commission fails to see how these independent franchises out of the franchisor are actually the same consumer they purport to protect. Therefore the logic that the incessant and unnecessary and totally over regulated and required disclosure is a bogus notice indeed. The Car Wash Guys do a disservice and can cause hurtful competition to our franchisees if we divulge information that easily. There is more information about our company in those 190-230 pages of the UFOC and attachments than on my personal computer or in my wallet. A person could go through my trash, car jack me and steal my wallet, with one of our company laptops inside and still have less information than is now required by the current UFOC.
The Federal Trade Commission purportedly cares about identity theft, yet demands personal information about myself, my employees and current franchises in a disclosure document that any one can get their hands on, even Osama Bin Laden? Who is the real terrorist? Is it government's job to help destroy franchising and all franchise systems? Then may I ask, who the Federal Trade Commission's franchising division will manage and regulate in the future when no one franchises anymore? When they admit they are destroying franchising to save it from the Domino Effect of the Evil Fraudsters. Is this 'my lie'? No it is the truth. Why are we burning down our global villages. Think about this simple logic and thanks for listening.