What Chain Has the Fairest Franchise Agreement? Worst?

Now you're talking, Paul. You're beautiful with your dander up.

But, of course, you are missing the point!  Mr. Purvin is rating the fairness of the contract, not the fairness of the franchisor, the deal, or any other factor that has any relevance to whether this is a trustworthy opportunity.

As Uncle Bob said, I have found religion.  I see that he is not being inaccurate, just irrelevant.  It's a pretty contract.  It's damn pretty contract.  And just because someone's picking the pocket of its admirers doesn't mean it's not a pretty contract.

And before you even get going, Supreme Building Technologies is NOT Elite Manufacturing! 

Paul, 

Yes, Bob still rates Cuppy's as the fairest CONTRACT.

NOT the fairest franchisor, not the best business model, simply the fairest contract. 

The fact that the Franchisor found a way to circumvent and avoid the provisions in the contract, and found willing franchisees who ponied their money up to a third party thereby foregoing the protections that existed in the contract doesn't make the contract any less fair. 

If in fact franchisees were more easily duped because the existence of a fair contract made them less suspicious of the Franchisor, I guess it would have been better if the contract had been really onerous, huh?

Bad people do bad things, regardless of contracts, laws, protections, etc.   The actions of Cuppy's didn't make the franchise contract any better or worse, and obviously didn't change Mr. Purvin's opinion about the document. 

Now, whether he or the AAFD should be touting the contract in public given  recent events, that's a whole different argument, one on which I think we would probably share the same side....

Purvin worked with Cuppy's in developing the franchise agreement, so of course he is going to say that they have the fairest.  Hell he probably wrote it for them and sent it to them and Cuppy's said 'Sure, sounds great' and had no intentions of ever completely abiding by it. 

I think it's a fair question to ask here:  How much money has Cuppy's 'donated' to the AAFD over the last couple of years and has any member of the AAFD taken consulting fees from them?

While, with this last pronouncement, AAFD may have fatally wounded itself (within this community), I think blind love caused it to trip on the sword.

A well formed 'contract princess' can be perfection to adoring eyes even though her lovers are left infected for life.

Personal bias in franchising (in life, period) results in an unhealthy approach to 'helping others', and as with every other costumed 'franchise due diligence' format, self-serving motives overshadow consumer best interests.

Onward, ‘knights of the windmill’.

Nick Bibby is a franchise consultant and principal of the Bibby Group.

I managed to take a video at the last AAFD meeting. (I snuck in unannounced with an ESPN crew.) The diapers in the video are laced with accredited AAFD contracts, in which you can see that several were successfully put on franchisors. The rule is that a franchisor must walk ten steps or 3 years to gain the title of Fair Franchisor. Watch for the grand finale at the end of the video when Purvin, wearing a black cap, blesses Cuppy's Coffee.

I was asked by Bluemaumau to list my top 5 franchise agreements, and I listed the top 5 agreements that I have scored--in other words I answered the question.  The AAFD requires a 95% score for a company to gain Accredited Contract Status -- because other safeguards present in earning the full fair franchising seal are not available.  Consequently, it isn't a surprise that AAFD Accredited Contracts would score at the top of the list.

 I have answered the question about why hotel franchises score higher than other industries many times -- including 14 years ago when my book first came out.  Typically, a hotel owner is a property owner and has sufficient investment savvy (and resources) to afford capable counsel and to resist unfair contracts.  Sadly, over the last 15 years, hotel contracts generally have been coming back to the pack -- the notable exceptions being companies that have earned the AAFD Seal.

You might ask the 40+ companies whose contracts did not make the AAFD grade if the AAFD is objective in its grading -- or you might simply read any AAFD Accredited Contract for yourself and ask "Don't I wish my franchise agreement respected my rights like this one?"

Bob Purvin
Chairman
American Association of Franchisees and Franchise Dealers

Recently a Bluemaumau guest asked the following question:

Mr. Purvin: How many have you "reviewed and graded as conforming to the AAFD Standards"? This is the top 5 of a list containing how many, total?

This is an excellent question, and bears response.

In total, the AAFD has graded about 60 franchise agreements, usually at the request of a franchisee association, but sometimes at the request of a franchisor that is considering trying to earn AAFD Accreditation. Only 18 brands have scored better than 80% against the AAFD Standards, and only 5 brands have scored above 90% compliant with the AAFD Standards.

Most agreements we grade receive a D or F Grade (below 60% conforming to our standards).

To earn AAFD Accredited Contract Status, an agreement must 'substantially conform' to the AAFD Fair Franchising Standards, and we at set that bar at 95% conforming. Expetec, Settle Inns and Cuppy's all scored about 99%. Meineke is the highest scoring mature brand, with a score of about 97%. The hotel brands that have earned the AAFD Fair Franchising Seal scored in the 80's.

The highest graded contracts have all been negotiated, and though not impossible, it would be hard to imagine an agreement scoring high that has not been a product of collective bargaining.

Having an AAFD approved contract is an important, but NOT the only important consideration in purchasing a franchise.

However, AAFD approved contracts deliver all of the rights that franchisee advocates have sought for years -- rights that have not been delivered through legislation or litigation, but are being achieved through negotiation.

After determining that the business model and brand are sound, Prospective Franchisees should adopt the mantra "I'll only invest if your agreement is AAFD Accredited." Existing franchisees should spread this advice -- only then will the marketplace demand fair and balanced franchise agreement at protect franchisees when things go South.

There are a lot of Cuppy's franchisees who were able to secure refunds because of the AAFD Accredited contract that they signed, and several commentators on Bluemaumau who consistently forget (or ignore) this important fact!

Guest writes: "Mr. Purvin: How many have you "reviewed and graded as conforming to the AAFD Standards"? This is the top 5 of a list containing how many, total?"

This is an excellent question.  I believe, and not doubt will be corrected, that in the last 15 years, the AAFD has been asked by less than 200 franchise systems to conduct reviews of their agreement - either by the IndFA or, very rarely, the franchisor. 

Why haven't more IndFAs asked for a review?  Why aren't there more active IndFAs? Don't know, all good questions.

Michael Webster PhD LLB
Franchise News

Guest,

Of course the franchise agreements favor the zors. It's their agreement! If you were the franchisor, you would craft the agreement to your benefit. it is human nature, and that is how business is done. There is nothing wrong with it, unless it is crafted illegally, or if it is written in such a way as to make it next to impossible for a franchisee to make money.

The franchise agreement is only part of the franchise business that one is investing in. Look at the total picture. Franchising works. Do your research the right way, and only use an attorrney well versed in all things franchise.

Self promotion coming now- www.FranchiseResearchSteps.com

franpro

Franpro is: Joel Libava, President

Franchise Selection Specialists Inc . Cleveland, Ohio