- Front Page
- Biz Tools
No relationship is perfect. Whether the relationship is personal, business or institutional, misunderstandings, unfair practices and general acrimony can lead two closely aligned parties to break apart. In any relationship, the belief that one party is taking advantage of the other can tear at the fabric that holds them together.
One of the keys to a long and prosperous relationship is balance. Mutual advantage is the key to sustaining the relationship. Relationships prosper when each party derives worthwhile benefits and subsequent returns.
Complicated institutional relationships such as labor, government, business, and franchising often require independent organization to ensure all parties have the opportunity to obtain proper representation.
The American Constitution utilizes a system called Separation of Powers which provides for “checks and balances” to protect American citizens. The key objective for the framers of the Constitution was to be certain no one branch became too powerful. Each branch checks the power of the other branches to make sure that the power is balanced between them, and ultimately the United States is stronger for it.
Similarly, strong and successful franchise systems strike the right balance so all stakeholders share in the rewards. By their nature, franchise systems require checks and balances to prevent one party from unfairly profiting at the expense of the other. Each party has interests to protect. The franchisor must secure protection for its trademark, control its business concepts and build its model. The franchisee must actively and faithfully operate his business because he often has significant capital and family resources invested in the system.
Inherent differences with respect to negotiating power, resources and access to information pertinent to the operation of a franchise system has led many franchise systems to seek out independent franchisee associations, advisory boards and supply chain organizations in order to address any inequities and solidify the evolution of the franchise system.
Independent Franchisee Associations (IndFA) provide franchisees the framework to balance the power in the franchise relationship. When franchisees organize through an independent trade organization they acquire the power and resources, to defend, protect and guard against imbalance in the relationship.
Franchisors may be resistant to the formation of a franchisee association. In some cases, franchisors may refuse to deal with the association or to recognize the association as a representative entity of the franchisees. In some cases, franchisors attempt to dispel the belief that an independent organization is necessary by aggressively promoting their own, internal advisory council as a solution to the problem of ineffective communication between the franchisor and its franchisees.
The continued evolution of franchising means more franchisees will gain power, influence and financial strength. The changing balance of power between franchisors and the companies which own their brands means greater participation in independent franchise associations is inevitable.
Each franchise system should have an IndFA to defend the interests of its franchisees and provide balance in the relationship. It’s up to the franchisees to take the necessary steps to better organize, communicate and advocate for their interests. Failure to do so can interfere with the long term viability and success of both an individual brand and the entire franchise system.
About the author: Jim Coen currently is in leadership roles of three franchise associations: the president of Dunkin' Donuts Independent Franchise Owners DDIFO Inc, vice chairman of the Coalition of Franchisee Associations, and director of the New England Franchise Association.