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How Franchisee Associations Can Help Level The Playing Field Between Franchisees And Franchisors

Posted on Date: Jul 28, 2014

How Franchisee Associations Can Help Level The Playing Field Between Franchisees And Franchisors

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In their marketing materials, franchisors like to tout themselves as a partner, a coach, or even a benevolent big brother to franchisees, providing training, advice, and support whenever the franchisee needs it. The whole idea of a franchise system has been carefully cultivated to conjure images of the franchisor and franchisee working hand-in-hand toward mutual success.

This idyllic concept is often shattered by the reality of how the franchisor-franchisee relationship really works. When franchisees dig into the 50+ pages of the typical franchise agreement, they may realize that the franchisor requires strict adherence to the company’s operating procedure while offering no promise of support. In fact, many franchise agreements specify that that franchisees derive no goodwill or owner’s equity from running a franchise. The franchise agreements are so restrictive that franchisees often have less flexibility than their own employees! That’s why Robert Purvin, Chairman of the AAFD, regularly compares franchise ownership to modern day serfdom.

Franchisees who sign on the dotted line are agreeing to play on an uneven field where the franchisor maintains complete control over the enterprise. If the franchisee struggles or opposes a franchisor’s action, they have little recourse even if the franchisor’s actions (or, more often, lack of support) are hurting the franchisee’s profits.

How can the franchisee possibly level the playing field? We believe that a strong and cohesive franchise association is one of the most powerful ways that franchisees can gain the attention of the franchisor and build a more collaborative relationship.

The power of the franchise association comes from the unity of the franchisees. Franchisors can easily ignore one unhappy franchisee, but when a significant number of franchisees (especially long-serving and high-earning franchisees) all speak with a single voice, most franchisors recognize the necessity to sit down at the table and listen.

Franchise associations also provide additional wide ranging benefits, including:

  • Shared Costs – Franchisees can share the costs of supportive services, such as ongoing legal advice and representation, when each member pitches in a small amount of money to achieve a significant funding pool.
  • Communication – Franchise associations allow franchisees to discuss their unique experiences with one another to help identify the most pressing issues and learn unique solutions. Equally important, franchisee associations serve as a megaphone to funnel franchisee concerns in a manner that will be heard and respected by the franchisor.
  • Clarification – Together the association can debate and formalize their most critical issues and bring forward a well-supported position to the franchisor that has the backing of a large portion of franchisees.
  • Training and Mentoring – Members of an association can network together, discuss shared challenges, and learn from their peers.

A franchise association, founded and managed by serious and passionate members, can help start to level the franchising playing field. The AAFD has been proud to assist in the formation of over 100 franchise associations and to provide ongoing training and coaching. Our AAFD franchise chapters have been able to successfully negotiate with their franchisors in many instances to develop a more fair, collaborative, and positive relationship.

If you feel like you are playing on an uneven field with your franchisor, then it may be time to consider the formation of a franchise association. Consider contacting the AAFD to learn more about forming a franchise chapter with the AAFD.

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