Introduction—When Desperation Becomes a
Business Model
I was one of those naïve people who believed in everything and anything—especially when desperation was my closest companion. During the Global Financial Crisis (GFC), I
lost everything.
I lost not just money or stability, but everything. At one point, I was sleeping in my car, holding on to the illusion that a breakthrough was just one seminar away.
Every “motivational” event promised salvation. You know the kind: a man in designer sneakers steps onto the stage declaring, “I have a Porsche, but I don’t care. My wife has perfect silicone implants, but I don’t care. I have a personal chef because my cholesterol is high—but I
don’t care.”
What they really cared about was the upsell—the next book, the next course, the next “proven system.” And in my case, that system was called franchising.
They told me, “Borrow money. Buy into a proven model. You can’t fail.”
But those words— “you can’t fail”—are the most dangerous in the business dictionary.
The Psychology of Desperation
When you’re drowning, you don’t question the hand reaching down to pull you up.
That’s what psychologists call the scarcity mindset—a cognitive state in which fear of loss suppresses rational thought and amplifies risk-taking behaviour.
Research in behavioural economics shows that individuals in financial distress are more susceptible to high-risk decisions disguised as “safe bets.”
In intelligence terms, such behaviour is social engineering—manipulating human emotion to bypass logical filters. Seminar speakers and franchise brokers use identical tactics: they create a controlled emotional environment, then offer a lifeline that appears rational only within that manipulated context.
Franchises are sold not with numbers, but with narratives—stories of people who “made it.” These success stories function as psychological anchors, guiding potential buyers toward a decision that benefits the franchisor, not the investor.
The Dream Sold: The Safe Investment That Isn’t
On paper, franchising seems flawless. You buy into a known brand, receive training, access suppliers, and operate under a system with a proven record. As The Brokerage Connection explains in its article “Is Buying a Franchise Worth It?”, franchising appeals to those seeking stability without the uncertainty of starting from scratch. The marketing pitch promises recognition, structure, and mentorship.
Yet, hidden beneath that polish lies a darker truth. The same article notes that high upfront costs, ongoing royalties, marketing fees, and limited control often outweigh potential profits.
Franchisees are not business owners in the true sense—they are licensed operators under tight contractual control.
The Australian Competition and Consumer Commission (ACCC) reinforce this warning in its official advisory, “Franchising: Is It for You?” The ACCC cautions potential buyers that they may “lose their entire investment” and must “carefully read disclosure documents and contracts.”
It further reminds would-be entrepreneurs that the franchisor’s success does not
guarantee theirs.
If you delve deeper, these warnings effectively convey the following message:
When you buy into a franchise, you are buying someone else’s system, not your freedom.
Behind the Curtain—The Legal and Economic Trap
Franchising agreements often include clauses that grant the franchisor extensive control over daily operations—prices, suppliers, store design, even uniforms.
While the contract might use words like “partnership,” legally it is hierarchical.
Attorney Danya Shakfeh, in her article “Buying a Franchise: The Good, the Bad, and the Ugly,” points out that franchisees frequently misunderstand the degree of autonomy they relinquish.
They are, as she writes, “technically independent but practically dependent.” They assume entrepreneurial risk without enjoying entrepreneurial freedom.
In Australia, the evidence of this imbalance is stark. The collapse of Retail Food Group (RFG)—which operated brands like Michel’s Patisserie, Donut King, and Gloria Jean’s Coffees—exposed systemic issues.
Investigations by The Sydney Morning Herald revealed that while many franchisees were losing homes and savings, RFG continued to profit through fees and supply markups.
This instance is not an isolated case.
The now-defunct Pie Face chain once expanded rapidly across Australia and the United States, backed by the same franchising optimism. Upon entering administration, the company left dozens of franchisees with debts, unsellable stores, and shattered families.
Argument: Why Franchising Should Work
Let’s be fair. The franchise model itself isn’t evil—it’s a structure.
If executed with transparency and integrity, it can provide:
- A proven framework: Established processes reduce trial-and-error risk.
- Brand recognition: Customers often trust known logos.
- Training and support: Good franchisors invest in their operators.
- Collective marketing power: National campaigns that individual owners couldn’t afford.
For individuals with limited business experience, these advantages can be invaluable—especially in industries like hospitality or retail.
Counterargument: Why It Rarely Works in Reality
But those advantages exist mostly on paper. In practice, several systemic factors undermine franchise success:
- Power Imbalance: Contracts favor franchisors. They can dictate pricing and suppliers and sometimes even force costly refurbishments.
- Financial Drain: Franchisees pay royalties, marketing fees, and other charges regardless of profit.
- Limited Flexibility: Innovation is discouraged. The moment you “think outside the system,” you risk breach of contract.
- Reputation Risk: One scandal under the brand umbrella damages all outlets—whether you were involved.
The result? The result is a landscape in which many franchisees function more like employees who have taken on their own jobs.
Data from the Franchise Council of Australia suggest that while some franchises perform well, failure rates can exceed 40% within the first five years—comparable to independent startups.
Yet the emotional and financial damage from a failed franchise is often far greater because franchisees typically invest borrowed money, believing they’re buying certainty.
Lessons from the Battlefield
In military & diplomatic intelligence, we were taught a principle: “Never move on emotion. Move on verification.”
Wars are lost not because soldiers lack courage but because commanders trust the
wrong map.
The same applies in business. During the GFC, I was searching for stability, not profit.
That’s why the franchising pitch appealed to me: buy safety, rent a dream. But the truth is, when safety is for sale, it’s usually counterfeit.
I remembered a lesson from the philosopher Arthur Schopenhauer, whose Art of Being Right reminds us of that rhetoric often disguises manipulation. The franchise industry is full of “Art of Being Right” practitioners—people skilled in persuasion, not necessarily in honesty.
So, I applied what I knew from the intelligence world:
- Investigate the source. Who is selling you the dream?
- Verify the evidence. What are the real profit margins after royalties and fees?
- Test the narrative. Are success stories statistically significant or cherry-picked exceptions?
When I did that, the façade cracked. I realized the only sustainable business was the one I built myself—from scratch, brick by brick.
The Ethical Question—Who Truly Benefits?
Franchising thrives because it satisfies two psychological needs: security and status.
It sells the illusion of being a business owner without the responsibility of true entrepreneurship.
For franchisors, it’s an unbeatable equation: they expand their brand using other people’s capital, transferring operational risk downstream.
From a legal perspective, such an approach is fully permissible. From a moral perspective, this practice raises questions.
As the ACCC notes, “Franchise systems rely heavily on trust and disclosure.” But disclosure documents, often hundreds of pages long, are filled with clauses that even lawyers find complex. Transparency becomes performative, not protective.
In investigative terms, the outcome is what we call plausible deniability: the ability to claim honesty while hiding intent behind complexity.
Real-World Impact—Broken Families,
Broken Dreams
After 15 years in business, I’ve witnessed too many people destroyed by what they believed was a safe bet.
The pattern is predictable:
- Savings are invested, often through loans.
- Initial optimism turns into exhaustion as fees consume profits.
- Marriages collapse under stress.
- Franchisees walk away with nothing but debt and bitterness.
Television exposés and parliamentary inquiries have confirmed these human costs. Yet the cycle continues because desperation is renewable—it regenerates with every
economic downturn.
Franchising persists as an industry built not on innovation, but on emotion.
From Intelligence to Independence
In war, survival depends on adaptability.
In business, it depends on ownership.
A franchise might offer structure, but it cannot teach resilience, creativity, or leadership—the qualities that define true entrepreneurs. These are forged through trial, failure,
and self-accountability.
When I left the intelligence world and entered civilian business, I realized that independence is the only strategy that guarantees long-term victory. Creating something of your own may require more time, resources, and fear, but it fosters a sense of sovereignty.
As Schopenhauer wrote, “Talent hits a target no one else can hit; genius hits a target no one else can see.”
When you buy into someone else’s system, you aim at their target, not yours.
The Final Verdict—Build from the Ground Up
Franchising can work—but only for a select few and usually under ideal circumstances. For the rest, it’s a high-risk venture marketed as a low-risk opportunity.
The ACCC urges all prospective franchisees to seek legal and financial advice before signing any agreement. The Brokerage Connection emphasizes understanding the full cost structure.
And Danya Shakfeh reminds investors that control—not just profit—is the essence
of entrepreneurship.
In the end, it comes down to one principle I learned both in war and in business:
If something sounds too good to be true, it’s not a deal—it’s a deception.
My advice to anyone tempted by franchising dreams is simple:
- Build your own legacy.
- Don’t rent someone else’s.
- When a franchise collapses, the brand may survive, but yours might not.