How are franchulates intended to work?

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Sudane Erato
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How are franchulates intended to work?

Post by Sudane Erato »

Since the Franchulate proposal presented by TOPGenosse came before the RA today (much to my surprise), I've attempted to shift into gear and study it. I will confess that the concept and implementation of the franchulates has always been a bit of a mystery to me, so this is my chance to attempt to grapple with it.

As I understand it, the concept of the franchulate is this. The CDS will own, by purchase, a certain amount of mainland land. Citizen "holders" of franchulates will rent parcels of that land from the CDS. By agreeing to rent parcels on this land, the citizen holder agrees to the framework of government imposed as a citizen of the CDS.

If this, indeed is the overall definition of the franchulate, then the act itself is very confusing. Let's examine what "parcel ownership" means on the mainland.

There are two ownership modes. (1) An individual owns the land, and pays tier to LL. (2) A group owns the land, and together, the group members contribute portions of their individual tier levels, which through their separate accounts they pay to LL separately.

The actual bill seems uncertain about which of these two ownership modes would apply. If in fact (1), then the EO of the CDS does indeed own the land and does indeed collect actual rent from the "citizen holders". The authority of the CDS is then expressed in the fact of ownership by the EO, somewhat analygous to the expression of authority on a private island through the power to "Reclaim". The *only* person subject to LL tier is the EO... all payments by citizen holders would be rent in the form of cash, paid to the EO.

Or, if in fact (2), then the fact that "ownership will be transferred to the EO of the CDS" is quite meaningless. A group is composed of many members, each with various authorities, and any of which can contribute tier for the monthly amount due to LL. While it is true that various catagories of authorities can be set up in the group, it is also true that the land is actually held by the group itself. It is not at all clear how the authority of the CDS is expressed (at least to me). The EO, *as an individual*, has no different a role than anyone else in the group, and therefore seems to me quite unnecessary.

In this situation, the current individual owner need only "Deed to Group" the land in question. The members of that group then share the tier to cover monthly payments to LL. The EO is not involved. And, it seems to me, the only connection with the CDS is the voluntary commitment on the part of the members of the group to submit to the authority of the CDS, buttressed by the escrow deposit. There is no "rate" set by the RA, as proposed, since there is no flow of funds from the citizen holders to the CDS Treasury. The group members are contributing tier. There is no financial relationship to the CDS at all (except for the transmission of the escrow amount).

These issues seem completely unresolved in the framework provided by the current franchulate law. I apologize that I have not made these comments before... the bill and the discussions that ensued in the RA last year left me quite muddled, and I determined to try and understand them when actual implementation came up, which it now has.

It is also *entirely* possible, maybe even probable, that I am just not understanding the mechanism of what is an entirely reasonable system. It's for this reason that I'm starting this thread, so that people who do understand it can explain it more clearly.

Sudane.....

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Post by Aliasi Stonebender »

Or, as another variation of 2, a group is established through which the EO owns the land; the citizen is then placed in a role in that group which gives powers similar to what they would enjoy in the rest of the CDS (ban/eject, return, etc) but witholds the right to sell the land; at that point the choice of the citizen paying us or contributing tier seems to be theirs (although with enough franculates, we could offer a discounted rate compared to what we pay LL, as the tier per m2 goes down as the tier levels increase).

One may ask what the point of all this would be, and (other than the rate break) that's a concern of my own as well. I suppose the main is it allows the CDS to expand onto the mainland and take advantage of the old-style pricing there, as opposed to the new, higher private sim rates, and to have a presence there.

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Post by Sudane Erato »

[quote="Aliasi Stonebender":8d36eqze]Or, as another variation of 2, a group is established through which the EO owns the land; the citizen is then placed in a role in that group which gives powers similar to what they would enjoy in the rest of the CDS (ban/eject, return, etc) but witholds the right to sell the land; [/quote:8d36eqze]
Yes, true. If this is the plan, then the critical first step is to establish a group membership structure in which the various roles and membership catagories are precisely laid out. Group priviledges can be very complex, and it is this structure which is at the heart of whether this plan works as intended.

Keep in mind, too, that any such priviledges extend to all parcels owned by the group, not just the parcel that you the citizen holder may have paid for.

[quote:8d36eqze] at that point the choice of the citizen paying us or contributing tier seems to be theirs (although with enough franculates, we could offer a discounted rate compared to what we pay LL, as the tier per m2 goes down as the tier levels increase).[/quote:8d36eqze] Here's where I get really confused. Any group member contributes or removes tier on their own authority. Indeed, if one group member (call that one the FEO) owned a total of one full sim of mainland land (the maximum price break), then that group member is paying the lowest possible rate (owning 32K-64K m2). Conceivably, another group member would prefer to pay the FEO at some rate lower than what *THEY* pay for the same m2 of tier. But, if they happened to have excess tier... (i.e. free tier), then it would be in their interest to provide that instead. If several group members provided "free" tier (which is what TOPGenosse proposes to do), and therefore withhold payment from the FEO (after all, they're putting in tier themselves!), the FEO could end up without the funds to cover their tier commitments. The FEO then would probably "tier down" increasing the rate that they would have to charge other group members who are not contributing tier.

This seems to be like total chaos. The only way I can see to have this make sense is if the FEO owns the land as an individual (or as a "private group" to get the benefit of the 10% discount provided by LL), or, if the benefits of group ownership are wanted, then citizens would be required to pay the FEO the monthly amount in cash regardless of whether or not they had contributed tier. Those contributions would be wasted.

As an additional note to this discussion, there is no clear explanation of how the purchase price would be recouped. If, indeed, the purchase price would be recouped in the "normal" way, in which the FEO charges a monthly rental in excess of their expenses, sufficient to pay off the purchase price in a reasonable period of time (the purchase price of each of our two sims was recouped in 2 to 3 months), then the price benefit offerred by the Franchulate system as compared to normal mainland prices is further reduced.

Sudane.....

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Franchulates in practice.

Post by Sleazy_Writer »

[quote="Sudane Erato":1badwttl][quote="Aliasi Stonebender":1badwttl]Or, as another variation of 2, a group is established through which the EO owns the land; the citizen is then placed in a role in that group which gives powers similar to what they would enjoy in the rest of the CDS (ban/eject, return, etc) but witholds the right to sell the land; [/quote:1badwttl]
Yes, true. If this is the plan, then the critical first step is to establish a group membership structure in which the various roles and membership catagories are precisely laid out. Group priviledges can be very complex, (...)[/quote:1badwttl]
Some short comments:
Sudane's (1) is the most straight forward way to go.
Aliasi's version of (2), above, is exactly what I was thinking of, and fit my needs better (=donate sq.m.). Sudane's right that the rights within that franchulate group needs to be figured out: Another reason why this testcase is useful.
I hope to comment in more detail soon.

Ranma Tardis

Post by Ranma Tardis »

I do not see the benifit for either party.
Why would anyone in their right mind buy land or a sim to turn it over to another party to own. It makes no sense to me.

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Post by Sudane Erato »

[quote="Ranma Tardis":29ojrf8f]I do not see the benifit for either party.
Why would anyone in their right mind buy land or a sim to turn it over to another party to own. It makes no sense to me.[/quote:29ojrf8f]Because by having the land "owned" by a holder (the FEO) of a great deal of land, they can pay a cheaper rate per month than if they owned it outright themselves.

Ranma Tardis

Post by Ranma Tardis »

[quote="Sudane Erato":310w8ewt][quote="Ranma Tardis":310w8ewt]I do not see the benifit for either party.
Why would anyone in their right mind buy land or a sim to turn it over to another party to own. It makes no sense to me.[/quote:310w8ewt]Because by having the land "owned" by a holder (the FEO) of a great deal of land, they can pay a cheaper rate per month than if they owned it outright themselves.[/quote:310w8ewt]

I do not see the big savings. It costs about the same to pay tier to LL as it does to pay rent to the CDS.
About turning over a 2000 dollar sim to the CDS, ah how does that save anyone money? I just dont see it, there is no savings from owning multiple sims and one loses the estate controls.

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Post by Sleazy_Writer »

[quote="Ranma Tardis":239ed6fc]I do not see the big savings. It costs about the same to pay tier to LL as it does to pay rent to the CDS.[/quote:239ed6fc]
Franchulates [i:239ed6fc]are not about[/i:239ed6fc] tier/payment arrangements, they need to be sorted out in a good way (apparently) but they are not [i:239ed6fc]about[/i:239ed6fc] that, but:
- CDS gains by possibility of tax revenue, expansion and extra exposure.
- Franchulate holder gains by availability of CDS institutions and perhaps lower L$/sq.m
So, all in all, it's not about the L$ but more about the interesting possibility that deserves to be explored.

But I agree with Sudane that we need to have a system that is not chaotic and doesn't require the EO or FEO to suddenly change the payment plan or find herself without money for that payment plan.

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Post by Sleazy_Writer »

[quote="Sudane":3mxx373p]If several group members provided "free" tier, and therefore withhold payment from the FEO, the FEO could end up without the funds to cover their tier commitments. The FEO then would probably "tier down" increasing the rate that they would have to charge other group members who are not contributing tier. This seems to be like total chaos.[/quote:3mxx373p]
[b:3mxx373p]Sudane, I agree with you that this sounds unworkable. [/b:3mxx373p]
Even if we discourage sudden tier-donation-or-not changes with an m^2 related escrow, it would still take a lot of administration, which is not a good situation.

[b:3mxx373p]For me personal, with this franchulate application, the donation idea was an ad hoc thing to keep it cheap.[/b:3mxx373p]
With 1 franchulate holder, this isn't too much trouble. [i:3mxx373p]I was proposing this cheap method of monthly payment because I want to explore the *rest* of the franchulate possibility.[/i:3mxx373p] After all, payment arrangements is not what the franchulates are about.

[b:3mxx373p]As for the situation where there are more than 1 franchulates, I propose the following:[/b:3mxx373p]
Land tier donation is possible, but only on entry, this allows:
- The executive branche and EO or FEO to take the time to figure out the payment while the application is being considered.
- If franchulate holder *drops* the donation, he will have to pay (more) monthly fee and that will only benefit the other franchulate holders.
- After that, he cannot use the donation option again
(- unannounced withdrawing of donated tier should be sanctioned. Small escrow?)

I think the tier-donation option is a nice little incentive for franchulates, but as written above the option shouldnt complicate it for the Exec, EO, FEO or other franchulate holders.

[color=blue:3mxx373p]New RA members & EO, please let me know if the tier donation option is acceptable to you in one form or another (before or after this discussion),
I need to discuss this with the chancellor for my own application.
If enough people answer that with a 'No' I'll stop considering it at all and start discussing the monthly fee with our chancellor & EO.[/color:3mxx373p]

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Post by Patroklus Murakami »

I'll confess to being utterly confused about franchulates. For a long time I held the opinion that it was 'a problem in search of a solution'. I've been persuaded that it is an alternative method of expanding our territory that ought to be explored. But the various permutations of ownership, payment, tier etc make my head spin!

What I need to see, in order to make an informed decision, is a clear statement of exactly what is being proposed.
[list:89k0vs4q]Who pays what to whom?
Who owns what at the end of the process?
What does the CDS gain/lose?
What does the franchulator gain/lose?
What additional responsibilities does this add to the CDS Estate Owner?
How do we extricate ourselves from this arrangement? (If, for example, someone wants to leave or things go horribly wrong)[/list:u:89k0vs4q]

Perhaps Pel could advise? I thought this was his idea, perhaps he could tell us how it was supposed to work?

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Post by Diderot Mirabeau »

I have to echo Patroklus' concerns about franchulates especially in these areas:

[quote="Patroklus Murakami":8m0tmtrz][list:8m0tmtrz]What does the CDS gain/lose?
What does the franchulator gain/lose?
What additional responsibilities does this add to the CDS Estate Owner?
How do we extricate ourselves from this arrangement? (If, for example, someone wants to leave or things go horribly wrong)[/list:u:8m0tmtrz][/quote:8m0tmtrz]
I'd like to further add that the money that goes into purchasing land from franchulees is money that will be taken away from our savings toward a new sim. At the current land rates on the mainland this is a hugely inefficient way of territorial expansion. And not only that - the CDS does not have any say in planning the land at all: In principle anyone could franchulate with us and demand 10,000L$ for his little piece of first land surrounded by ugly prim sculptures, no access lines and obscene textures.

Consider this example:
Current mainland rate for 512 sqm parcels: 10,000L$ = 35 USD
Current acquisition price for one private sim: 1,675 USD

As can be seen we would pay about 48 times as much for a private sim as we do for one 512 sqm parcel at current rates. However, a private sim has an area 128 times as large as the 512 sqm parcel. In addition to that we have total control over the layout, planning, terraforming, surrounding context, theme and covenant in the case of the private sim whereas with the mainland parcel we practically get no benefits except for an unspecified revenue stream, which is dependent on us being able to find a group/role setup that gives franchulees sufficient privileges to still retain some degree of control over their land while not at the same time being able to use/abuse those privileges on the land of other franchulees.

It seems clear to me from the above that mainland 'franchulates' are not the best investment from a perspective of territorial expansion. And it seems to me that they are also a rather expensive method of bringing democracy to the mainland.

Personally, I think I'd prefer spreading democracy on the mainland by providing territorially governed communities with the tools necessary to help them establish their own democratic system of self-governance. This is what is envisioned in the Simplicity Party's draft policy on Promoting Democracy in SL, which we hope to finish soon and present before the RA.

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Post by Sudane Erato »

[quote="Diderot Mirabeau":3uf7mr7w] I'd like to further add that the money that goes into purchasing land from franchulees is money that will be taken away from our savings toward a new sim. At the current land rates on the mainland this is a hugely inefficient way of territorial expansion. [/quote:3uf7mr7w]
Ahhh... it seems that what's really missing here is a solid understanding of what purpose the franchulate is intended to achieve.

My understanding is that the purpose of the franchulate is not simply to expand our territory. Indeed, it may not even be the case that the CDS would need to *purchase* the land at all, but that in some circumstances the current owner might simply transfer the land to the CDS in exchange for the benefits they might gain.

Diderot, I completely agree that this is *not* a good system for basic territorial expansion, for the very reasons you suggest. But if an owner, in their own wisdom, should determine that they wish the benefits of the CDS system of community and governance, and quite possibly the financial benefit of a reduced monthly fee, then that might be motivation to add her/his land to the CDS "empire".

Clearly, we are all not fully clear about the intentions of the franchulate system. This is another case of a bill which was discussed at great length last year, and finally passed. I think in this case that we should respect this as a concept approved by the people's representatives, but, one which is in need of the clarification of details.

And, perhaps its needless to emphasize but, my role here is simply to provide a clear implementation of what the community has decided. The franchulates system is an interesting idea, and I for one will not speculate on whether it has good features and bad features. I'm here only to make it work, if we can find a way to do so.

Sudane.....

Ranma Tardis

Post by Ranma Tardis »

I still do not see the point behind it, sigh...........
They are not jumping to have their land incorporated within the CDS are they? How many sq meters the mainland are part of the cds or how many private sim owners have decided to surrender ownership for the benefits of the CDS?
None so I suppose this is a pointess disussion.

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Post by Sleazy_Writer »

[quote="Ranma Tardis":2go6c01m]how many private sim owners have decided to surrender ownership for the benefits of the CDS?[/quote:2go6c01m]
None :-) But how many of the 3 million mainlanders *know* that it's possible to join the CDS? None.

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Franchulate questions.

Post by Sleazy_Writer »

Pelanor will probably soon respond to the questions with more nuance, but this is the way I look at it: (If you ask a lot of questions, expect a lot of answers!)

[quote="Patroklus":24n4nj6o]I've been persuaded that it is an alternative method of expanding our territory (...)[/quote:24n4nj6o]It is.
[quote="Patroklus":24n4nj6o]Who pays what to whom?[/quote:24n4nj6o][b:24n4nj6o]1.[/b:24n4nj6o] Exec. determines rate (incl. various things), franchulate holder pays rate to CDS official (most likely simply the Est.Owner) I requested donation instead of rate, but it's likely to be denied or accepted only in exceptional cases.
[b:24n4nj6o]2.[/b:24n4nj6o]CDS and franchulate applicant negociate land price (=ownership), CDS (=official managing treasury) pays to applicant. Negotiated price can be 0 L$ (as Sudane mentions below) if CDS dicides there's nearly no benefit for them except having an extra citizen.

[quote="Patroklus":24n4nj6o]Who owns what at the end of the process?[/quote:24n4nj6o]CDS owns land (and selling powers within a possible group and possibly group-roles power).
Franchulate holder holds all *other* powers over land, as is normal within the CDS and SL. (Groups must be set up with care)
Franchulate holder also owns the L$ he got for his land.

[quote="Patroklus & Diderot":24n4nj6o]What does the CDS gain/lose?[/quote:24n4nj6o] CDS gains by possibility of tax revenue, expansion of land and population, and extra exposure.

[quote="Patroklus & Diderot":24n4nj6o]What does the franchulator gain/lose?[/quote:24n4nj6o]Franchulate holder gains the availability of CDS institutions (optional marshalls, SPC builders etc., CDS Trader's association etc.) and perhaps a lower monthly fee. At larger quantities, the monthly fee for mainland is lower than that of private islands.

[quote="Patroklus & Diderot":24n4nj6o]What additional responsibilities does this add to the CDS Estate Owner?[/quote:24n4nj6o]I don't know if these are official duties of the EO, or if we simply trust Sudane to do it, but:
- Collect monthly fee for franchulate.
- Buy the land once a price is agreed.
- Maintain a mainland LL-account and choose the right payment plan.
Unless we want to bring this under another official.

[quote="Patroklus & Diderot":24n4nj6o]How do we extricate ourselves from this arrangement? (If, for example, someone wants to leave or things go horribly wrong)[/quote:24n4nj6o]Quote Pelanor: "Also there may be a separation clause that allows you to remove the franchulate from the CDS". It seems reasonable and practical to allow this for both parties and negociate.

[quote="Diderot":24n4nj6o]The money that goes into purchasing land from franchulees is money that will be taken away from our savings toward a new sim. At the current land rates on the mainland this is a hugely inefficient way of territorial expansion.[/quote:24n4nj6o]I think part of our mission is to work with fellow democratic minded people, even when it isn't terribly attractive financially. (We wouldn't accept losses for the CDS the ofcourse) I mean, did West Germany say "Let's forget about the east, we won't make any money there."? I think we should try to allow smaller mainlanders to join the CDS.

[quote="Diderot":24n4nj6o]And not only that - the CDS does not have any say in planning the land at all: In principle anyone could franchulate with us and demand 10,000L$ for his little piece of first land surrounded by ugly prim sculptures, no access lines and obscene textures.[/quote:24n4nj6o]Not a strong argument: Both parties have to agree on the price, including the value of the land which includes the surroundings, so the CDS does have a say. Negociating the price isn't literally in the franchulate act but seems only logical.

[quote="Diderot":24n4nj6o]Example: Current mainland rate for 512 sqm parcels: 10,000L$ = 35 USD
Current acquisition price for one private sim: 1,675 USD[/quote:24n4nj6o]If the current price of 512 sqm within a private 65536 sqm sim is only 13 USD, this can be a bargaining tool of the CDS when negociating the price of the parcel. On the other hand, buying mainland is a form of investment.I don't know how Private Island land sells on the market, but if the CDS buys mainland for below-market prices, it can be easily resold.

[quote="Diderot":24n4nj6o]We have [no] control over the layout, planning, terraforming[/quote:24n4nj6o]Not entirely true, the franchulate holder can (in larger franchulates I imagine) call upon the expertise of a SPC.

[quote="Diderot":24n4nj6o][No control over] surrounding context, theme and covenant[/quote:24n4nj6o]
This is part of the package when you allow mainlanders to join. I would rather expect the CDS to export good design to the mainland instead of the mainland exporting advertising and porn to the CDS sims.

[quote="Diderot":24n4nj6o]dependent on us being able to find a group/role setup that gives franchulees sufficient privileges to still retain some degree of control over their land while not at the same time being able to use/abuse those privileges on the land of other franchulees.[/quote:24n4nj6o]That's negative thinking on your part .. This only needs to be figured out once and my application is a convenient test case for it.

[quote="Sudane":24n4nj6o][quote="Diderot":24n4nj6o][...] is a hugely inefficient way of territorial expansion.[/quote:24n4nj6o]
Ahhh... it seems that what's really missing here is a solid understanding of what purpose the franchulate is intended to achieve.[/quote:24n4nj6o]"NL 5-4 A. Definition
1. Franchulates are parcels of mainland land held by an individual that become territories administered by the codes, constitution and TOS of the CDS."
In other words: Expansion of the CDS and SL democracy, in other words, a good thing :-)

[quote="Sudane":24n4nj6o]Diderot, I completely agree that this is *not* a good system for basic territorial expansion[/quote:24n4nj6o]If you say it's not efficient L$-wise, I'd agree. It's the prerogative of the chancellor and the RA's approval to decide how much a franchulate is worth to them.

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