AAFD Task Forces

This task force is defining what it means for a franchisee to have “equity” in a franchised business and what is needed to protect franchisee equity rights during the franchise if they should leave the franchise or be terminated. The group considers rights to sell, renew, and grow, as well as rights after termination.

This task force focuses on two different but related areas. The first focus is to determine how best to achieve recognition of a franchisee association from a franchisor, and the related questions of whether this will require a broad legislative push or a franchise-by-franchise contractual effort. Secondly, the task force will look at how franchisee associations can maintain relevance in order to retain and grow membership for the long-term.

Both market protection and rights to compete are among the most crucial and complex issues that franchisees face. The market protection clause in a franchise agreement can literally mean professional life or death to a franchise, while the right to compete clause could restrict a franchisee’s ability to seek new opportunities now or in the future. This task force faces many challenging questions and will have to find solutions that balance their own needs with the needs of the franchisor, which are often diametrically opposed to each other.

One of the primary benefits of joining a franchise is the purported power of shared marketing. All franchisees pay into the marketing fund, but are they all getting the promised, or even fair, benefit? This task force is discussing common marketing abuses and reviewing methods to create a more fair and transparent use of marketing funds.

A private equity takeover can be a serious threat to a franchise system. When this happens, franchisees can find themselves as the mercy of a new owner whose priority is to increase ROI, often at the expense of product/service quality and customer care. This Action Task Force will consider how franchisees can prepare for the possibility of a private equity takeover and develop a collaborative relationship with their new owner.