Listening Session with Federal Trade Commission to Address the Industry’s Unfair and Imbalanced Franchise Model over Franchisees

By Published On: April 5th, 2023

American Association of Franchisees and Dealers Co-Hosted “Is Franchising Fair?”
Listening Session with Federal Trade Commission to Address the Industry’s Unfair and Imbalanced Franchise Model over Franchisees

Franchisee Testimonials Provided FTC with Information to Improve Oversight

Palm Desert, CA (May 4, 2023) – The American Association of Franchisees and Dealers, a national trade association advocating for franchisees and independent dealers, co-hosted the session with the Federal Trade Commission (FTC) to address the industry’s concerns about the existing franchise model in anticipation of the FTC’s request for comment due next month. Keith Miller, Director of Public Affairs and Engagement for AAFD and principal of Franchisee Advocacy Consulting, was the moderator.

The 45-minute session featured the Honorable Lina Khan, Chair of the FTC. More than 1,500 small business franchisee owners from the AAFD, the Coalition of Franchisee Associations, and the Asian American Hotel Owners Association registered for the webinar.

“Since 1980, less than a year after the initial promulgation of the Franchise Rule, we have urged the FTC to recognize that franchisees are consumers and entitled the protection against unfair business practices under the authority of Article 5 of the Federal Trade Act. We greatly appreciate that the FTC is actively listening to our concerns,” said Robert Purvin, chief executive officer and chairman of AAFD.

The FTC is charged in promoting fair competition through fairness and transparency. By strengthening existing policies or creating new ones, they make sure that dominant firms are not using their power imbalance in unlawful ways that would lock out small businesses and entrepreneurs.

On March 10th, the FTC announced a Request for Information and requested the submission of public comment on franchise agreements and franchisor business practices. The comment period will cease on June 8th.

Many AAFD member associations seek to have the FTC ban non-compete clauses that often force franchisees to choose between signing a new contract with significantly worse terms, or not be able to make a living in their field of expertise.

Should a franchisee elect not to renew, LINE-X appears to be weaponizing a previously never enforced Non-Compete provision. . . Our owners believe the threat of a non-compete, used as leverage to force acceptance of a new one-sided agreement, is quite frankly, tantamount to extortion.” said Scott Keck, LINE-X franchisee.

In addition to addressing non-compete clauses, participating franchisees raised concerns regarding franchisor practices to mandate suppliers which have customarily filled their pockets with rebates and kickbacks without delivering quality and better price options for franchisees.

To listen and watch the session, visit here: https://register.gotowebinar.com/recording/recordingView?webinarKey=8052325513814056792&registrantEmail=landscooter%40gmail.com

Media interested in interviews with Mr. Purvin and/or Mr. Miller, please contact Lucila Garcia at 323-646-2150 or lucila@outcomeprstrategy.com.

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The AAFD is a national non-profit trade association representing the rights and interests of franchisees and independent dealers throughout the United States. The AAFD’s mission is to achieve Total Quality Franchising We do this by promoting fair and equitable franchising and dealer practices and empowering effective independent franchise associations.  We also provide members with programsservices and products which enhance their individual businesses and careers.  

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