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You Asked, We Answer – Why Would the AAFD Accredit a Franchisor with a Bad History: A Case Study

The AAFD recently received an inquiry about our awarding of the coveted Fair Franchising Seal to Tutor Time, a company that had been previously disciplined by the US Federal Trade Commission. We thought all AAFD Members and subscribers would be interested in our answer: Thank you for your recent inquiry to the AAFD. You asked: “I know the FTC action [against Tutor Time] was a long time ago, but how can a potential franchisee trust your organization when one of your accredited franchisors had engaged in the sort of practices you are trying to prevent?” Tutor Time went through a complete change of ownership 10 years before the company was accredited by the AAFD, and the company we accredited had completely different ownership and no connection with previous management. Notwithstanding the fact that this was completely different ownership, AAFD accreditation is available to companies that atone for past errors and reform their franchise practices to meet the AAFD’s high standards. The criteria for AAFD Accreditation are set forth on our website: 1. The company must recognize and bargain with an independent franchisee association, and the association must nominate the company for accreditation. 2. The AAFD Committee on Standards must find that the franchise agreement we are accrediting is consistent with the AAFD’s Fair Franchising Standards – this may involve substantial negotiations with the franchisee association to amend to agreement to meet our criteria. We will not accredit a company whose agreement is not 85% in conformity with our standards.. 3. Once our Standards committee votes in favor of accreditation, the independent owners association must agree with our findings and also find that the company’s actual practices are consistent with our Standards. The FOA must then nominate and endorse the company to receive the AAFD’s Fair Franchising Seal. 4. Finally, the AAFD conducts a telephonic survey of all franchisees in the system and asks three questions: a. Are you reasonably satisfied with the franchise agreement under consideration for accreditation? b. Are you reasonably satisfied with your relationship with your franchisor? c. Do you vote for your franchisor to be accredited by the AAFD? d. We must attempt to contact every franchisee in the system (at...

AAFD Public Guest Posting Policy

The AAFD welcomes guest blog submissions from those who have something relevant to say about franchising and/or of interest to franchise owners. We look forward to hearing from franchise owners, attorneys, suppliers, consultants, or others who can provide special insight into an area of franchising, or of general interest to small business owners. AAFD blogs are typically posted throughout the week, but blasted to blog subscribers the Monday or Tuesday following the date of posting. Our guidelines are simple. Guest post submissions must: • Be related to franchising in some manner or of significant interest to our blog visitors, o We are a national organization, so highly regional topics are not favored unless they can relate to our broader audience. • Be written in an engaging, understandable manner • Not focus on the same topic of a recently published post. (Please review our blog so as not to write repetitive content.) • Not contain derogatory, discriminatory or highly critical language (we are not about tearing down individuals or specific companies) • Provide some relevant takeaway that will be useful to our readers • Be no longer than 1,000 words. (We may make an exception in special cases.) • Not be obviously commercial or self-promoting. The AAFD provides resources for members who are interested in marketing their services to our community, including listings on the AAFD.org website and periodic email blasts. If you are writing about a service or product you provide, your proposed blog should provide relevant information without being self-promotional. We accept blog posts from members and non-members, but the AAFD Bylaws only allow Supporting (supplier) Members to market products and services through the AAFD. This means that only Supporting Members can include live links to their organization in their guest blog post. Non-member guest bloggers can include their name, title, affiliations and email address at the end of their blog post without live links. We will review all submissions. AAFD members will receive priority posting privileges. If the article meets our standards, we will approve it to post and will give you an estimated publishing date. If it doesn’t meet our standards, we may provide suggested edits or let you know it’s...

BizBuySell.com and AAFD Announce AAFD Franchise Business Sales Program for AAFD Members

The AAFD and BizBuySell are pleased to announce a special discount program for AAFD members looking to sell (and buy) franchised businesses.  Through the new program, branded as AAFD Franchise Business Sales, BizBuySell will provide a range of business sale services to AAFD members at a discounted price. “BizBuySell is the premier resource for selling and buying businesses, including franchised businesses, in the United States today,” said Ross Almo, the AAFD’s newly appointed Executive Director.  “We are thrilled to partner with BizBuySell and to offer significant savings to AAFD members who are looking to sell their franchised businesses.” “BizBuySell is pleased to be working with the American Association of Franchisees & Dealers and their members who might be looking to buy or sell a business” said BizBuySell General Manager Bob House. “Not only do business buyers benefit from gaining access to listings they otherwise might never have seen, but any member who is thinking of selling a business can now access BizBuySell’s resources to help them sell faster and smarter.” BizBuySell is the largest online marketplace for business and franchise sales. According to a company representative, they currently have over 40,000 business sale listings and receive over one million website visitors a month. Their business listings are also featured on more than 150 partner websites, including The Wall Street Journal, The New York Times, The Chicago Tribune, The Los Angeles Times, and many more. Through this partnership, BizBuySell will provide AAFD members with a special discount on all BizBuySell ad packages, as well as other free and discounted products.  Members who are interested in selling their businesses will receive significant savings when listing the sale through the AAFD/BizBuySell co-branded program, which will be seen by hundreds of thousands of prospects. BizBuySell offers three different advertising packages, starting as low as $59.95 per month for their three-month standard package (before the AAFD member discount). The BizBuySell website also offers additional resources for those looking to sell their franchise, including information on how to sell a business, a business news section and a community forum. Visitors to the AAFD website will soon be able to access the AAFD Franchise Business Sales Program through the AAFD Marketplace,...

Bob Purvin Joins Roundtable Discussion Of Franchise Real Estate Issues On Podcast

Bob Purvin recently participated in the June 30th podcast of Commercial Real Estate Radio, hosted by Howard Kline. The topic of the podcast was “Opening a Franchise: American Dream or a Landlord Nightmare?”, and Bob was joined at the roundtable by Perry Roshan-Zamir, Vice President and General Counsel of Baja Fresh and Robin Day Glenn, a franchise attorney who has been representing franchisors in California for many years. Together, the roundtable guests brought decades of franchise legal experience and very different perspectives to the lively and congenial discussion. Throughout the one-and-a-half-hour episode, the guests discussed the current trends in franchise real estate and some of the trickiest issues that franchisees, franchisors and landlords face when negotiating a real estate deal. Some of the specific topics that the guests tackled included the importance of the real estate lease to the franchise operation, changing trends in franchise leases, how different franchisors exert control over a franchisor’s location and real estate lease, the growing rise in lease riders, and the relationship between franchisors and landlords. The guests provided important insights from the perspective of the different parties involved: the franchisee, the franchisor, and the landlord. As Perry mentioned early in the episode, a large amount of conflicts between franchisors and franchisees are related to lease and landlord disputes. An important point that Bob brought up during the discussion was the need for franchisees to use an experienced franchise attorney when making real estate decisions. Many new franchise buyers make the mistake of believing that their franchisor is their mentor and will negotiate a lease with the best interests of the franchisee in mind. This is not always the case, and there are many instances of lower-tier franchisors that have little if any knowledge and experience in negotiating a real estate deals on behalf of their franchisees. This podcast produced some really great discussions and highlighted a lot of real estate issues that are important to new and current franchisees. We strongly recommend taking some time to listen to the recorded podcast, available on the Commercial Real Estate Radio website. This will be a valuable listen for current franchisees, those considering buying a franchise, real estate agents looking...

Bob Purvin Discusses The Myths of Franchising and Fair Franchising Legislation on the Franchise Radio Network

The Franchise Radio Network, a new weekly radio podcast that covers a wide variety of topics of interest to franchise owners, invited AAFD Chair Bob Purvin as the featured guest on its inaugural podcast, first aired on June 21, 2013. The podcast’s host, Aaron Phillips, spoke with Bob about a wide range of topics, including the myths of franchising (detailed on this blog), the pitfalls of franchising, how to discover the right franchising opportunity and Senate Bill 610, a piece of fair franchising legislation that is making its way through the California legislature. An online recording of the 30-minute podcast is now available. The Franchise Radio Network podcast was a great opportunity for the AAFD to reach out and help franchise owners and those interested in buying a franchise understand that not all franchise opportunities are created equal. As Bob discusses in the podcast, owning a franchise is often more like renting a job than owning a business, with few protections for franchisee interests and rights. During the interview, Bob was able to highlight the efforts of the AAFD to protect franchisee rights, advocate for franchisee interests, and negotiate for a franchising community that delivers the enormous potential of the franchise method of product and service distribution. We invite you to take a listen to the interview to learn more about the AAFD, what types of franchise abuses a franchisee needs to look out for, and why Senate Bill 610 is so important for...

Announcing the New AAFD Members Only Web Portal!

The AAFD is proud to announce that we have established a new membership portal that allows our members to log into their AAFD account and access special members-only benefits. Now, when you visit the AAFD website, you’ll see the option to log into your account at the top right-hand side of any page. Upon entering your username and password (provided to you when you established your membership), you will be taken to your account where you can take advantage of a growing array of benefits, including: AAFDMeetingCallsm Free Conference Calling In partnership with TotallyFreeConferenceCalls.com, the AAFD offers all members unlimited free conference calling capabilities, loaded with features including free call recording and a web based moderator dashboard for added call security and management. You can also host low cost webinars. Office Depot Discount Card Whether you need more ink cartridges, note pads, binders or office furniture, Office Depot has all of the office supplies you need to keep your business running. Now you can get those office supplies for even less money. The AAFD offers all of its members an Office Depot discount card, which provides 80% off preferred products, 15% off over 3,000 products on the Office Depot website, free shipping on orders over $50 and many other benefits. Download your FREE Office Depot discount card from your member page any time. AAFD WellCard We are extremely proud to offer our members AAFD WellCards, which provide exclusive discounts on a wide range of medical related products and services, including prescriptions, medical visits, dental visits, vision care, hearing devices, lab work, chiropractic visits, and a 24/7 Doctor on Call service, plus much more! The benefits include up to 65% off of prescription medications, 30% off of doctor appointments and 20% off of mail order prescription drug services. If you are a member of the AAFD, you need to take advantage of this opportunity to save on the healthcare costs of yourself and your family. You can sign up to receive your free AAFD WellCard through your membership page. Franchisee LegaLineSM Voucher The AAFD Franchisee LegaLine, one of our most popular services, is a network of some of the best franchise attorneys throughout the country....

California Fair Franchising Legislation Approved by Assembly Judiciary Committee

June, 18, 2013. The AAFD just received word that California Senate Bill 610 has been approved by the CA Assembly Judiciary Committee by a vote of 7 – 2 in favor of moving the bill forward. This is another big step for the bill which still faces a few hurdles to passage into law.  On July 2nd, the bill will go before the Assembly Committee on Business Professions and Consumer Protections. If approved by this last committee, it will move to the floor of California Assembly for a full vote. If it passes the Assembly, it will finally arrive on the desk of Governor Jerry Brown for approval. The AAFD is a primary sponsor of SB 610, which would create an affirmative statutory duty of good faith and fair dealing in franchise relationships and reinforce the right of franchisees to join and participate in franchisee associations. The bill also provides franchisees the right to sue if they believe their franchisor has not acted in good faith with regard to franchise sales, renewals, transfers and terminations. AAFD CEO, Robert Purvin testified in support of the bill before the Senate Judiciary Committee and plans on further testimony before the Assembly Business and Professions Committee on July 2nd.  Purvin stated, “This may be the best opportunity yet to approve legislation that protects the rights of franchisees. The current makeup of the California government, including both houses of the legislature and the governor’s office are more pro-franchisee than we’ve seen in a long while. This gives me a lot of hope for SB 610 even though it is fiercely opposed by the International Franchise Association and other associations that represent the interest of franchisors.” The AAFD once again urges all California franchise owners to contact their State Assembly Representative and voice your support of SB 610. Show your support by calling and faxing California State Assembly offices with a simple statement urging a YES vote for Senate Bill 610.  The coming two weeks are critical.  Three calls will be huge; ten calls even more so!  Use this link for a list of all California Assembly members and their phone numbers. ...

This Just In from Office Depot!

The Office Depot is now offering an additional 15% off already discounted prices through the Office Depot Online Purchasing Program.* This is a great way for AAFD members to start taking advantage of this win-win program. Remember: All online orders are delivered next day with no charge for orders of $50.00 or more. Log in to your AAFD Members Only web page to get your Office Depot Coupon Now! LOGIN NOW » *Not valid for in-store purchasing. Customers that have already purchased on line are not eligible for this...

Franchise Myth Seven: Buying a Franchise Means that you will Lower the Cost of Doing Business through the Power of Group Purchasing

Part Eight of a Nine Part Series Exposing Franchising Myths. The myth that owning a franchise guarantees to lower your cost of doing business due to the synergies of group purchasing that will benefit the entire franchise network is, quite sadly, the most recent addition to the Franchising Hall of Shame.  I didn’t even recognize franchisor abuses with respect to suppliers as a distinct and separate issue when my book, The Franchise Fraud, was first published in 1994.  Twenty years later, the failure of franchisors to deliver on the promise of group purchasing—indeed, the frequent abuse of the supplier process to actually increase and inflate a franchisee’s cost of doing business—has risen to become my personal ‘enemy number one’ among franchise abuses. Twenty years ago the top two franchisee complaints were the lack of promised support and the lack of market protection. Today by far the most frequent complaints received at the AAFD deal in some fashion with a franchisor abusing its ability to dictate suppliers to the franchisee’s significant detriment.  Some examples (by no means a comprehensive list) include: Most often, and most damning, the franchisor has leveraged its ability to dictate suppliers to charge excessive wholesale prices to its franchisees, sometimes forcing franchisees to pay more for some products that are available for less ‘at retail’ around the corner. Franchisors that leverage their ability to deliver captive buyers forcing suppliers to pay exorbitant commissions and rebates, which, in turn, pressures suppliers to pass these fees onto their captive purchasers, the franchisees Dictating a sole source of service or support, such as a uniform POS system, that eliminates the advantage of a competitive market Requiring a distant supplier to service a need that is available at a lower cost locally Requiring marketing dollars to be spent nationally without consideration to the effectiveness in the franchisee’s local market Franchisor abuse of the ability to dictate suppliers has become so rampant in the past 20 years that many franchisee advocates seek to prohibit the right of franchisors to dictate and control the supply chain completely! And therein lies the rub!  The ability of a franchise system to drive down the cost of doing business should...

California Fair Franchising Legislation Passes CA Senate!

May 28, 2013. Fair franchising legislation authored by State Senator Hannah-Beth Jackson and sponsored by the AAFD has passed in the California State Senate by a vote of 22 Yes and 12 No. There were five abstentions, and just two Republican votes were cast in favor of the measure. Now the legislation moves to the State Assembly, where both sides are expected to offer amendments. AAFD Chairman, Robert Purvin, was pleased with this second important step for the CA Senate Bill 610, which just a month ago was passed out of the Senate Judiciary Committee. "This is the best opportunity in years to have major franchisee protection legislation enacted to protect the vital interests of franchise owners," said Purvin. Senate Bill SB610 will impose an affirmative and enforceable duty of good faith and fair dealing between franchisors and franchisees. If passed, California law will require that franchisors act fairly and in good faith when enforcing one-sided franchise agreements. The bill also protects the right of franchisees to organize and support independent franchisee associations. The AAFD appreciates the efforts of many members and friends who voiced support for this important legislation! Next, advocates for the bill will turn their attention to California State Assembly offices. The AAFD has recommended some amendments to further improve the effects of the bill. Most important is an amendment that would define independent franchisees associations as covered parties under the bill with the right to bring actions on behalf of their members to enforce the benefits of the bill. Stay tuned for more information to follow. Read More...

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