In my previous blog post, I talked about how franchisors are eager to advertise themselves as benevolent mentors to prospective franchisees. Their marketing materials often paint a picture wherein franchisors will work hand-in-hand with each franchisee toward mutual success. Unfortunately, over the past decades franchise agreements have become more and more restrictive and onerous until today a franchisee often has less freedom than their employees. In contrast to industry hype, most franchise agreements promise little or no support or ownership equity in the franchisee. Additionally, the courts have routinely found that franchisors have no fiduciary duty to franchisees. These precedents have led to what the AAFD considers widespread abuse among franchisors, and it’s the primary reason that that AAFD developed its landmark Fair Franchising Standards.

For over 30 years, the AAFD has fought for Total Quality Franchising, which we view as a collaborative, positive, and mutually respectful relationship between franchisors and franchisees. We believe that a collaborative relationship between franchisors and franchisees will provide the solid foundation that can lead to shared success.

We’ve talked a lot about Total Quality Franchising on this blog, but what would a truly collaborative relationship between franchisors and franchisees actually look like? Here’s what we think:

  • Good Faith and Mutually Respectful Relationship: The franchisor would recognize its responsibility to provide good faith support and loyalty to its franchisees, which includes fair dealings, due care in its duties, and consideration of franchisee concerns and challenges.
  • Right to Equity: The franchisor would allow the franchisee to build equity in the franchise over time.
  • Right to Representation: Franchisees would have the right to communicate with the franchisor about questions, concerns, challenges, and suggestions for improving the system.
  • Full Disclosure: The franchisor would share all relevant information with perspective franchise buyers, including earnings data, so that the perspective buyer can make an educated decision about investing in the franchise.
  • Freedom to Terminate: The franchisor would allow the franchisee to terminate the franchise relationship for a reasonable and just cause.
  • Protection from Unreasonable Termination: The franchisee would not have to worry about being terminated without a reasonable or just cause.
  • Ongoing Training and Support: The franchisor would provide continuous training to the franchisee to help improve sales.
  • Marketing Support: The franchisor would provide advertising, marketing, and promotional support to increase the visibility and value of the brand.
  • Franchise Association: The franchisor would be willing to negotiate with a franchise association that represented its franchisees.
  • Renewal: The franchisor would allow franchisees to easily and conveniently renew their franchise.

If you look closely, you might notice that a collaborative franchise agreement looks very similar to the Franchisee Bill of Rights that the AAFD first promulgated in 1992. In fact, it’s hard to imagine that a collaborative relationship can exist between a franchisor and franchisee until a franchisor recognizes the AAFD’s Franchisee Bill of Rights.

A collaborative franchise relationship doesn’t happen overnight and it doesn’t happen on its own. Oftentimes, a franchise association is the catalyst for this transition by empowering franchisees to speak with one voice.

Jessica is a professional freelance writer and copy-editor and is the owner of Endeavor Writing. Jessica writes blogs, newsletters, website content, press releases and more for a wide array of clients.