There has been much discussion and chatter in recent months about a spate of franchise fairness legislation being considered in several state legislatures.  In  a recent blog article, “Showdown in Harrisburg, Pennsylvania,” http://www.bluemaumau.org/showdown_harrisburg franchise attorney Ted Pearce questioned the sagacity of proposed legislation.  In doing so, Mr. Pearce paid a compliment to the AAFD’s efforts to promote franchisor accreditation as a better approach:

“During the late 1990’s and early 2000’s, when the American Franchise Association proposed national franchise relationship legislation, another franchisee-sponsored organization sought to rebalance the franchise relationship though market forces anchored by the concept of a fair and balanced franchise agreement. The American Association of Franchisees and Dealers (“AAFD”), formed in 1992, pioneered the idea of “Total Quality Franchising,” and encouraged franchise systems to engage in collaborative negotiations to develop a fair contract under AAFD Fair Standards guidelines. The prize for this collaborative conduct was the fair franchising seal, which could be affixed to a franchisor’s disclosure document”.

Mr. Pearce goes on to lament “Today, however, the AAFD’s initiatives have waned.”

In fact, the AAFD is still dedicated to identifying franchise systems that can earn of Fair Franchising Seal.   Two companies are currently pursuing AAFD accreditation to empower the growth and success of their franchise systems.  We are still convinced that AAFD accreditation can advance a brand’s growth and profit by creating collaborative franchise systems which allow AAFD (and franchisee) endorsement of AAFD Accredited Brands.  Our progress has been slowed by the economy and other observable factors, including:

1.    The lack of a threat of legislation has reduced the pressure on franchisors to accept negotiated franchise agreements as an alternative to regulation.

2.    The AAFD has set a high bar for Accreditation – recognition of an independent association and a negotiated agreement endorsed by the association and ratified by system franchisees.

3.    Franchisors have seen are bar as either too high, or have not met our criteria in the opinion of their franchisees.

For most franchise systems, the decision to apply for the AAFD Fair Franchising Seal is the commencement of a process to a collaborative culture, the recognition of an independent franchise association that may have been previously disavowed, and the negotiation of a new agreement and culture.  In the best of circumstances, the process is time consuming and uncertain.

The threat of new legislation has increased inquiries about the AAFD Seal. For franchisees, the path to government regulation also remains complicated and uncertain.  There is no certainty that effective laws will be achieved, and there is a possibility that key benefits of franchising may be diminished by newly adopted legal requirements. We continue to hope that both franchisors and franchisee associations will come to realize that negotiated relationships are the best path to achieving great brands, and to propel growth and mutual profit.  The AAFD Fair Franchising Seal remains the best opportunity available for a franchisor to separate itself from its competitors, and for franchisees to incentivize the quest for fair franchising and balanced franchise agreements.