AAFD Chair: Why Join Franchisee Associations?
SAN DIEGO — Mr. Robert Purvin, chair of the American Association of Franchisees and Dealers, sits down with Blue MauMau to discuss the importance of franchise owners to band together to form an independent franchisee association to act on their behalf. The AAFD, a trade group representing the interests of some 50,000 franchise owners of numerous franchisee associations, stresses promoting a collaborative franchise culture between franchisor and franchisee.
Purvin states that he is a believer in the franchise model. “When it works right, the franchise model is free enterprise at its best,” he declares.
BMM: What are the benefits of participating in an independent franchisee association?
Purvin: I have to say that there are franchisee associations and there are franchisee associations. Some can be destructive, while some can be very constructive. Just to say any association is a panacea would be a mistake. There are risks to forming an association. Your franchisor may be dead set against it, no matter what you do. There are franchise systems that literally prohibit franchisees from talking to other franchisees — if they learn that you contacted somebody else to ask, “What’s going on?”, there are repercussions.
But generally speaking franchisees coming together for the purpose of sharing their passion for the brand, to improving the brand, to engaging the franchisor in constructive dialogue for their own benefit but also for the benefit of the franchisor is a wonderful thing for everybody concerned. But when a franchisee association comes together, packages themselves as a valuable asset of a franchise, markets themselves to the franchisor as a valuable asset, engages the franchisor in the way that I encourage, which is to engage the franchisor by understanding the franchisor’s pain, and becoming a solution for the franchisor’s pain in exchange for the recognition of needs that the franchisees have. In that context clearly, any franchisee that participates in that association is going to reap benefits.
BMM: Aren't many franchisees often motivated to band together because they’re angry, there’s a crisis, and they want their problem resolved right away?
Purvin: Yes, when a group comes together in crisis, the resolution of that crisis dominates. It may resolve well, it may resolve poorly, but it will resolve. If that association’s sole underpinning is that crisis, it won't last.
The AAFD thinks associations are valuable tools and should last. Early on we try to demonstrate to all of our groups the value of coming together.
One of our chapters came up with the idea, which we have communicated to other chapters, something we call the Member's Advantage. It’s a very simple thing where we do conferences — usually teleconferences. We invite franchisees to come. But they have to pay admission. The admission is that they come with an idea, a problem, a question, something that they want to share with their fellow franchisees, and dialogue with them to try to solve. They can share a new idea, they can try to solve a problem, but everybody who comes to the call has to come with their admission payment, and they have to pay it when they sign up. We go through on a two-, two-and-a-half- hour call. Depending on how many items there are, we have. 3 to 10 minutes to discuss it. If the item has merit, the group votes and they put it to a task force and they go to work on it. I frequently suggest to franchisee groups to invite the franchisor to this call as a listener. This is the franchisee’s hour. But the franchisors can get as much worth out of it as the franchisee groups do.
When we do that call, everybody on that call comes away knowing the answer to your question. 90% of the people on that call say, the dues we paid to join that association was fully earned in the last two hours. Because they will get 10-12 ideas. The item is put into a queue to achieve resolution. So the power of the network is that together everybody achieves more.
Franchisees often say, "We want to light the torches and storm the castle." When groups come to me they typically tell me, "We want to hire lawyers, we want to file a lawsuit, we’re mad as hell, we’re not going to take it anymore."
BMM: Is that a bad approach? It certainly is a motivator for many aggrieved franchisees.
Purvin: Absolutely it’s a bad approach. A well constructed association has its goal to make the franchise work, as opposed to lynching the franchisor.
I ask the group, what is it that you’re trying to achieve? And the short answer is that they want to be successful in their brand and to have a great working relationship with their franchisor. And then my next question is, is lighting the torch and storming the castle a strategy that’s built to get you to a good marriage? And I turn it further. I ask people, in order to shift their paradigm of thinking, in order to get them thinking about a better way, I will ask them, in your business, do you deal with customers? And of course, the answer in every instance, is, yes, we all deal with customers. And I’ll say, 'When you’re trying to attract business from your customers, how many of you use a strategy of when the customer comes up to your counter, staring them square in the eye, and say I demand you do business with me, I demand you buy my hamburgers from me, and if you don’t, I’m going to call my attorney and sue you?'
Hopefully I get some laughter.
Most franchisees freely admit that this is not the way to build business. And then my next question is, 'You don’t get somebody to do business with you through threats and coercion, why do you think that will be a successful strategy with your franchisor?' What we try to train franchisees to realize that franchisors and franchisees are each other’s customers, a bilateral relationship, and that if you sit down and think about your franchisor as you would think about your prospective customer, you would be likely to say how can I help, you would listen to my franchisor’s problem, I would try to demonstrate how my association is the best place to come in the world to deal with that problem and in exchange for how we’re going to solve your problem, here’s what our needs are.
As opposed to saying, we have rights, we demand our rights to be fulfilled, I mean you’re going to get to your rights, but let’s get to your rights in a context in which your franchisor, says, if I solve these guys’ problems, they’re going to help me get to where I want to go. If you think about it, when you entered into the relationship with the franchisor at the very beginning, you were saying, choose me, choose me, I’m going to be a great lieutenant, and I’m going to be a great franchisee, and he said the same thing, And then, when you got married, you showed up and said, where’s dinner?
We’re really trying to change the dialogue into what I believe is a more logical dialogue.
BMM: Do you typically have franchisors attend these meetings?
Purvin: Typically, the answer is no. Sadly. The franchisee is worried or fearful at the outset of having the franchisor attend. The first one anyway.
BMM: What about the franchise owner who says to himself, “I’ll let those other guys go fight the fires, and I’ll freely ride on their accomplishments.” Is that an insolvable problem for independent franchisee associations?
Purvin: It is a problem but it’s not an insolvable one. It’s a bigger problem when the franchisee association has a death wish for the enterprise that causes the franchisees to be careful. When we are successful in building the core of a franchise association, the company is down on you if you don’t join. because they’ve supported the association. Meineke went through all kinds of wars, but Meineke is encouraging people to participate [the franchisee association] because the franchisor has learned that when there’s a strong association there’s a funneling of dissent amongst the franchisees into a unified voice and Meineke is able to deal with the franchise association more efficiently than if it has 500 different franchisees it has to deal with.
BMM: I think I understand. There are say 10 voices of representatives as opposed to 1000 disparate ones.
Purvin: Exactly right. One of our franchisors today came to me and was talking about the concessions that they had been making unilaterally with different franchisees. I would never have advised the franchisor to do that because now it has to deal with 10 different iterations of the franchise agreement. Those 10 franchisees are going to be looking over each other’s shoulders and upset that they’re not getting the same deal that everybody else got. Had they negotiated with the franchisee association, they would have uniformity within the system, which is a vehicle through which systemwide change can take place. Maybe it’s a little harder from time to time but the goal of uniformity would be preserved. If the franchisor does it right, not only are the franchisees benefiting, but the franchisor is also benefiting.
Suddenly the guy on the outside that didn’t join sees that both the franchisees and the franchisor are upset with him for not joining. The AAFD wants to to make it enticing for franchisees to be a member of their franchisee association.
BMM: How do franchisee associations make it enticing for a franchisee to participate in the association. What are some takeaways they can have for joining?
Purvin: Well, there are takeaways at lots of different levels.
When we are successful at convincing association s of our strategy — of a nonconfrontational, collaborative, and helpful way with their franchisor — the franchisees who are fearful of retaliation are much easier to recruit.
When a group comes together in an adversarial fashion, those people who are not feeling adversarial and those people that are fearful of adversarial relations will stay away.
The reverse is not true. If the group comes together in a positive proactive way, those franchise owners, who already understand the need of coming together, will join anyway. So those people are not the people that are hard to bring in.
The networking of individuals and sharing of ideas is the biggest benefit of an association. That’s number one. Number two is that a person can freeload only if there is enough people to carry the ball. So freeloading supports failure of the association. And what the freeloading franchisee misses out in sharing of successful ideas, the mentoring that goes on.
Now there are other benefits that happen, when a group starts developing vendor relationships, when they start offering things like health insurance, and of course the piece de resistance is the Meineke situation of [purchasing] coops. Here’s what happens in the coop: the vendors to the coop are not going to restrict their deals to the members of the coop. So if I’m Meineke and I have a deal with Marymount Muffler, the Marymount salesman is going to go call on a non-association member and that person says I’ll buy from you, but I want the coop deal. That vendor’s going to figure out a way to do it. He’s not going to lose the deal because the guy is not a member of the Meineke Dealers’ Association. But, when he makes that sale, he’s going to give money to the Meineke Dealers’ Association in the form of a rebate. The Meineke Dealer’s Association distributes that rebate to its members. And this guy who got the same deal will have left money on the table. That's one of the reasons the association have a very high percentage of members.
BMM: Was it hard for Meineke franchisees to negotiate a purchasing coop? That was probably something the franchisor handled before.
Purvin: The short answer is no. It wasn’t hard. But that was because of the culture of Meineke. The Meineke dealers had the right to have their own [vendor] deals. Through the coops, all franchisees receive a better deal. As a result, the chain became more competitive, because Walker which was the corporate company, and Marymount, the dealer’s [coop] company, were directly competing with each other. And the brand won. That ended up being a good thing where everybody wins. And it’s evolved now where Meineke corporation is a member of the purchasing coop. They have a very collaborative culture.
And yet, you go to a Meineke [association] meeting and they’re like a bunch of Jewish religious scholars arguing about the Talmud. They really do have a rich history of collaborating and even though there’s turmoil and debate, they develop very efficient programs.
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Related Reading:
- Bob Purvin: "Franchisee Associations Are Growing But We Should Be Seeing More"
- The AAFD's Focus on Fair Franchising
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