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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...

Urgent Notice: AAFD Members and Friends are Urged to Support California Fair Franchising Legislation! Senate Action is Imminent! Please act now!

Fair franchising legislation authored by State Senator Hannah-Beth Jackson and sponsored by the AAFD is scheluled for a vote by the California State Senate the week of May 27.  This is the best opportunity in years to have major franchisee protection legislation enacted to protect the vital interests of franchise owners. 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. All franchisees, especially California franchisees, are urged to take a few minutes to voice your support for this important legislation!  Show your support by calling and faxing California State Senate offices with a simple statement urging a YES vote for Senate Bill 610.  The coming week is critical.  Three calls will be huge; ten calls even more so!  Use this link for a list of all California Senators and their phone numbers. http://senate.ca.gov/senators Read more about the Proposed California Fair Franchising Legislation. ...

Put Your Franchise to the Test with the AAFD’s New Self-Evaluation Tool

The AAFD is proud to offer its new and current members an invaluable tool that will help them assess the strengths and weaknesses of their current franchise or a franchise they may be seeking to buy. The AAFD’s Franchise Opportunity Self-Evaluation Tool is a FREE tool for AAFD members that was built using the same metrics as our AAFD Franchise Opportunity Review service. The tool’s evaluation criteria is based on the AAFD’s principles of Total Quality Franchising, our cornerstone manifesto Eight Things to Look for in a Franchise Opportunity, and the AAFD Franchisee Bill of Rights. The AAFD Franchise Evaluation tool lays out a list of twenty-one essential elements that are present in a worthy franchise opportunity. Users rate each element of a particular franchise using a numerical score.  Because each element is deemed to be a critical criterion for franchise selection, each element has a suggested value of 100 points.  Adding up the score of each franchise opportunity being evaluated will allow users to understand the overall strength of the franchise’s business plan, as well as the rights and protections provided to the franchisee in the franchise agreement. This tool is a great resource for both prospective and existing franchise owners.  It is intended to raise red flags and separate good prospects from poor opportunities, but not as a substitution for engaging qualified counsel to review any opportunity under serious consideration prior to investing. Current franchise owners can benefit from this tool as well, especially when their franchise is up for renewal. The AAFD Franchise Opportunity Self-Evaluation Tool will be provided to all new AAFD Associate Members as part of their initial membership package. Current AAFD members can contact the AAFD to request access to the tool. Just keep in mind that this tool is not a substitution for professional legal consultation. The AAFD strongly urges all prospective and current franchise owners to seek advice and representation from a knowledgeable and experienced franchise attorney. All AAFD Associate Members are entitled to a free consultation from any one of the experienced and knowledgeable franchise attorneys in our LegaLineSM...

Franchise Myth Six: Franchising Creates a Critical Mass of Market Penetration

Part Seven of a Nine Part Series Exposing Franchising Myths. Too many prospective franchise buyers I know assume that a franchise is successful because it is “big enough” to sell franchises or because it already has hundreds of franchises in operation. The mere fact of franchising does not equal successful market penetration, nor does a specific amount of existing franchises. The truth is, almost any company can decide to franchise. There are no minimum performance or quality standards, no certification and no oversight board that qualifies a business to franchise. Likewise, a business with ten franchise locations can have ten strongly performing franchises or ten terribly performing franchises. The number of franchises doesn’t necessarily mean the franchise is safe and successful. True market penetration means that a chain embraces enough units to enjoy a broad customer base and economies in purchasing, distribution, and advertising. Many franchise systems fail to achieve business synergies for a variety of reasons, including: • While the brand has potential, there are not enough units in business to constitute critical mass. • The brand may be well established in its home market, but is unknown in new markets. Franchisees may be paying for local goodwill that doesn’t exist. • Although there may be hundreds, even thousands, of existing units, the brand may be tired and losing market share. For many brands, their best days may be behind them! • And saving the worst for last, many strong brands in the public eye make unfair demands of their franchisees and deny (or simply fail to achieve) the economies of scale that prospective franchisees expect and need to be successful. For sure, achieving a critical mass for marketing, purchasing, and other economies of scale is an important potential benefit to be gained through franchising. But if you detect our common theme you are learning – not all franchise systems are created equal! Great brands that seek to achieve and cultivate economies of scale in their branding, purchasing and marketing efforts can supercharge your business. Franchisees working for common cause with their franchisor can benefit from the combined marketing and purchasing power of the entire network. But as we have seen, where franchisors...

Franchise Myth Five: Franchising Promises a “Proven Franchise Business System”

Part Six of a Nine Part Series Exposing Franchising Myths. This is a myth I hear from prospective franchises all the time, and it’s one of the most compelling reasons why an individual decides to buy a franchise. Franchisors aren’t just selling their name and logo to prospective franchisees – they’re selling their operating manual, which many claim is a “proven business system”. What is a proven franchise business system? I still haven’t figured this one out.  A lot of franchisees leap to the conclusion that a proven business system means that a franchisor has spent countless years developing an ironclad recipe for success, which they then pass on to franchisees. This system is “proven”, because the franchisor has apparently worked out all the bugs and knows exactly what a franchisee needs to do to be successful, from construction, purchasing and cost controls to advertising and what shade to paint the walls. Not so fast! Franchising as a concept does not promise proven performance; rather, buying a franchise from a proven performer is a script for success.  Another important thing to keep in mind is that “proven success” today does not guarantee proven success tomorrow. The world is constantly changing, along with consumer tastes, competition and technology. What works today might not work tomorrow and will almost certainly not work precisely the same way in ten years. The real franchising myth here is the notion or suggestion that a “proven franchise business system” even exists. The best franchisors are constantly updating and evolving their operating manuals, marketing and branding in order to keep up with the evolving dynamics of their industry.  The best franchise brands have a developed track record for staying ahead of the curve, keeping fresh and adapting to changing customer needs and appetites.  Again, let’s take a quick test.  Thirty years ago what business did McDonald’s focus on? If you said hamburgers, shakes and fries you would be right on.  And what does McDonald’s marketing plan look like today?  Hmm, the lead product now seems to be McCafe’!  McDonald’s has never stood the test of time by standing still.  Truly, its ‘proven system’ is to continually evolve, modernize and change! Moreover,...

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