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In this interview, the final in a four-part series, Robert Purvin,* founder and chairman of the 25-year-old American Association of Franchisees and Dealers (AAFD), speaks about the importance of franchisee-owned cooperatives that direct brand functions, such as national advertising or purchasing.
SNIEGOWSKI: Why don't franchisee associations give out awards to franchisors for what they esteem as good franchising behavior? I have seen very little of that, other than what your organization does. I mean franchisors award franchisees every year for specific conduct that they want other franchisees to emulate. Franchisee associations could give awards for specific conduct – for example, collaboration act of the year, community service, best joint national-local marketing campaign, most improved financial disclosure, most outstanding field operations director, most improved franchise contract, or executive award of the year for outstanding contribution in lifting franchisee profits. I'm just pulling award names out of my head, but what I'm asking is why don't franchisees award franchisors for specific good conduct? It is always the other way around, the franchisor gives awards to franchisees.
PURVIN: I think too many of us are hardwired for all or nothing. For example, there was a franchisee organization that negotiated from the franchisor an improved franchise contract for its franchisees. I advised its leaders that they needed to thank the franchisor for taking this step. They should nominate the company to be [AAFD] accredited. Their answer was, "We did not get everything we wanted. We are not going to say thank you until we receive everything that we want."
That particular group did not understand the incremental value of small steps towards a larger objective. It is funny in that some of the people running that organization are parents. In their parenting skills, I am sure that they are crowning their children with both love and discipline. They encourage their kids to grow, but also discipline their children when they need it in the hopes that they are developing whole individuals. Raising a franchisor is very similar. (Laughs)
Franchisors will say the same thing about franchisees.
When I get on the phone with a den of angry franchisees, who are mad as hell and are not going to take it anymore, I ask them two questions. The first is if I had a magic wand and I could grant them the wish of either beating up their franchisor until he is penitent or that the relationship with their franchisor was as they imagined it on the day that they signed the franchise contract, in every instance they vote for the latter.
The second thing I say is that when they call a customer for the very first time and want that customer to do business with them, do they look at the customer square in the eye and say, "I demand you do business with me or else I will sue you."
Everyone laughs. What they do is go to the prospective customer and say how can I be of help. How can I help you get what you want, Mister Customer? Let me show you how I am the best guy to get you there. If you go to your franchisor with that attitude, isn't that a better way to get his business?
Without exception that is the instance in which people's minds become changed. If I go in with my torches blazing, and storm the castle, the franchisor is going to close the castle doors, circle the wagons, and go into a defensive posture. What I want him to do is to come out and deal with me, two men who want to do business with each other.
SNIEGOWSKI: I can hear readers saying that a specific AAFD chapter may have negotiated a great contract with its franchisor, but so what? Sometimes no matter how great a franchise contract has been negotiated, there is no getting over the fact that their franchised business is built on unfertile ground or a poor design that will not earn them a living. One group of franchisees may have a great legal framework of protection that your organization recognizes, but the franchise system and its business model may be poorly thought out. Right?
PURVIN: Yes. There is no part of the AAFD that has been able to figure out how to make a bad business model a good one. But we have had instances of helping bad businesses have a controlled crash landing. For example, we used to have a chapter for Blockbuster Video franchisees. Guess what happened? Online streaming killed the video store—although I still have a house full of VHS tapes. The AAFD is not going to be able to fix a bad business. But there have been chapters that have been able to successfully negotiate the take down. One of our chapters was a business that was disappearing. We were able to negotiate five exit strategies for different franchisees. The association did it, executing its own destruction. But that is okay. The point there was to smartly take down something that needed to be taken down.
But you are right. The thing that we cannot fix is a bad business. What we can do is impact how the business model is addressed for our franchisees.
SNIEGOWSKI: If franchisees collectively are in deep trouble, who are the best people that would know how to fix it?
PURVIN: In my mind there is no question that franchisees are benefited by having an association of their peers. They can mentor each other.
But there is something else. There is another element that is much more prevalent than having the brilliant Ray Kroc of McDonald's up at the top or Andy Puzder of Carl's Jr./Hardee's dictating things. There is something else missing, which is much more often the case. The guy dictating the terms of the process is not Andy Puzder at the top or franchisees at the bottom, who has been leading his store for 15 to 20 years. Mr. or Ms. Franchisee understands the marketplace.
One of the major problems in managing a chain of franchised stores is that the guy who is enforcing the franchise standards is a hired staffer who is maybe five years out of college. They are the ones who dictate to the franchisee, based on what his business teacher taught him in school. Talk about the inmates in charge of the asylum! Every franchisor chief executive that is worth anything says that their franchisees are their most prized assets. Well, if they are such valuable assets then they need to treat them as a valuable asset with the respect they deserve.
*Robert Purvin is busy nowadays preparing the AAFD for a franchisee leadership summit from April 30 to May 3 in Indian Wells, California. Besides being an attorney representing franchisees for some 40 years, Purvin is also the author of The Franchise Fraud: How to Protect Yourself before and after You Invest. He has been a tireless advocate for franchisees and their rights for decades.
The AAFD's raison d'être is to help franchisees with a brand to collectively improve their franchise contracts by educating them and bringing franchisors to the bargaining table. It does so by building independent franchisee associations.