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Leaders in the franchise world weigh in on the necessity of having less oppressive contracts between those who grant franchise licenses and franchised establishments that dot main street.
Jason Daley, reporter for Entrepreneur Magazine, has written a well-balanced article that looks also at franchisee concerns from a variety of sources, rather than more traditional statements that franchisors dish out.
An army of franchisor attorneys has created a monster of a contract points out franchisees. Dave Glodowski, franchisee of Hardee's restaurants and chairman of the Coalition of Franchisee Associations says that franchise contracts are much worse now than they were 25 years ago. "Officers at franchise systems talk to each other," he explains on how franchisor attorneys share contracts that give over more and more control to franchisors. "They see it as protecting their brand, but it's also a form of control," says the franchisee leader. Glodowski and his team think they have an answer in declaring twelve rights that all franchisees should have.
Then don't sign the franchise agreement declares Richard Solomon, an attorney who largely represents angry franchisees in litigation against their franchisors. Solomon argues that franchisees need to grow up and live with the contracts that they sign. "They (aggrieved franchisees) didn't want to comply with the terms of the agreement after they got into business. What they need is competent due diligence before they sign an agreement." Solomon argues that franchisees should make sure that supposed rights are in their contract.
What fairness problem, asks a group that largely lobbies for the interests of franchisors, the International Franchise Association. "We don't think a Bill of Rights is really necessary," says the IFA. Their association thinks they already have something that polices the industry. "We're really proud of our Code of Ethics," declares Alisa Harrison on how the IFA solves bad franchising practices. However, right now her members aren't so interested in fixing outrageous agreements but rather are urging for a helping hand from the government in stimulating loans. "They can't get credit," says the IFA spokesperson. (Without credit, sales of franchise units are hard to come by nowadays.)
Our franchisee rights came first and are more complete than the CFA's franchisee bill of rights says attorney Robert Purvin, chair of the American Association of Franchisees and Dealers. "It's the same thing we did 20 years ago, and it didn't need to be done again," he says. Purvin says that franchisors have too much power to terminate franchisees at will and to ban franchise owners from pursuing their livelihood afterwards. "Can you imagine a journalist paying $100,000 to get a degree to practice in their field, then being told by a newspaper they can't be a reporter if they leave the company?" he says. "Those are huge deals not dealt with in the CFA version."