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Log In / Register | Apr 16, 2014

Franchise Models Are Broken!!!

As you all know, I'm a relatively new franchisee, even though my family has been in this industry and real estate development since the 50's and have a combined operational experience of more than 200 locations in Southern California and abroad under various brands.  In fact, one of my uncles sat on the first advisory board of the Original OPEC commission with the King Reza Shah Pahlavi II before he move to United States to work as regional area developer for Chevron.  I did not want to be in the gas station business but I was forced to foreclose on a site since my parents were carrying a note on a site. 

I guess you can say I'm the next generation.

I've seen and learned quite a bit so far during my four and a half years as an ARCO AMPM franchisee and during the tenure on the Service Station Franchisee Association board. I've been exposed to people within ARCO AMPM organization, not only from many parts of the California, but from all over the United States. Serving as Vice President of the Service Station Franchisee Association, Inc. during the last year, I have been exposed to a variety of people and a varity of issues and concerns.  The common thread between all these franchisees is that not only they are all ARCO AMPM franchisee but they are all individuals that are working hard to just try to make a descent  living to provide for their families and loved ones.

Initially, being introduced to so many new and different people and all their issues and concern was overwhelming, in some ways shocking. It was quite an adjustment. Honestly, it still is an adjustment to get used to this ever-changing landscape of issues and problems.  Franchisees feel alone, have no answers and are getting no answers.  This a common problem that needs to be addressed not just by the SSFA but BP and the new franchisor as well.

I have found it to be very interesting at times, but also very difficult. I have been forced to humble myself and just bite my lip and take a deep breath to avoid conflict in certain situations. I've learned that there are always going to be differences in interests and opinions, and that we all have to learn to adjust and respect each other.

This is not always an easy thing to do by any means. In fact, it has proven to be difficult more often than not. Factors such as where we're from and how we were raised influence every aspect of our lives. I've noticed that people have a natural tendency to get along better with those with whom they have things in common.

I am fortunate though, that my personal experiences have taught me how to exercise patience and tolerance with people so that I'm able to work with them, despite our differences in interests and opinions.

Despite all our differences, I believe to this day that we the SSFA Board have displayed a positive image of unity and togetherness, not only in our SSFA membership, but also throughout our entire franchise network. We were forced to drop everything we were doing and share a common fear; loss of our business and our livelihood.

We have all came together as one collective voice, and put all of our differences aside to focus our concern on our AMPM brand recovery and well-being. It has since been a time of healing and an amazing display of participation, pride and brotherhood, not only within local franchise community, but also among all the franchisees throughout the nation. Maybe it shouldn't have taken an incident of some many lawsuits, so extreme and drastic for this to happen, but sometimes that's just what it takes for us to truly realize how precious life and liberty really are.

Out of all of this, the most important lesson that I have learned is that we must put aside our differences and disagreements--whether it is difference of opinion or matter of fact--for us to reach a common goal. We all need to learn how to work together as a team to strive for efficiency and success.

This week I attended the annual Board meeting of the Coalition of Franchisee Association, (CFA), and I learned we are not alone.  The other 18 brands being represented have common issues as well. 

The Franchise Model is broken!

Our franchise model is broken.  More and more franchisors are selling their model/businesses to equity investment companies. Yes!!! Wall Street is buying franchisor businesses.  The equity firms' business model are a 5-7 year window to maximize profits and sell off the franchise business to another equity investor.   The franchisee — you and me — are left holding the bag.

Did you know if you take any franchise disclosure document and contract and cover the name of the brand, they are pretty much the same contract and disclosure document?  They are all written for the benefit of the franchisor. Every brand uses their store system's manual to bypass the franchisee contracts in order to force changes, additional expenses and costs to franchisees.

And the most important thing I learned over the week in Washington D.C., lobbying for change and the Franchisee Bill of Rights, was that the Franchisor is not the enemy or the problem. IT IS US!!!

We have, as franchisees, three basic deadly sins that we must overcome if we are ever going to change the franchise business model and succeed.

  1. Greed
  2. Sloth
  3. Fear

As a group we must unite for the betterment of the entire group and put our own financial/personal ambitions aside. (GREED)

We must all get involved!!! Over this past week I was shocked to find out how many laws are being passed every year. Over 125,000 new ones have passed last year alone.  Many affect our businesses in one way or another as we mind our own stores. (SLOTH) The old saying is right, that if you're not at the table (lobbying and negotiating), you're going to be on the menu. This week membes of SSFA and the Coaltion of Franchisee Associations engaged with our elected representatives. We will be writing the menu! So please stay engaged in the political process. Take action!!!

We need to overcome our (FEAR)!!!  The Franchisor does not have the power. We do!!!  We must take that the power back and create a fair business partnership.

Our membership has never been as strong as it is now.  For the first time we are getting non-members, industry associations, political active groups soliciting us for help and wanting to join the SSFA. As the representing board members, we need to step up and take a leadership position.

In my humble opinion it is time for all us to evaluate ourselves and what we are bringing to the table.  If we want to take our association to the next level we must ask ourselves how committed we are willing to be.

We must revaluate and write a new Business Plan, Strategic Plan, and a Financial Plan for the next five years.  I am willing to step up, ARE YOU?!!!

My friends, we need legislative action and must all support and unite behind the Franchisee Bill of Rights.  If we pass this law at a federal level, we shall accomplish a major triumph and create for the first time a fair and leveled playing field.

Please take a moment to Endorse  the UNIVERSAL FRANCHISEE BILL OF RIGHTS and join the SSFA in support.

I do not want to take up more of your time, but putting our differences aside and helping others, especially in time of need, is what life is all about. This is a difficult task and a constant battle, but I firmly believe that by disciplining ourselves to work together as one is the only way to achieve true peace and happiness. So, let our differences go by the wayside, and let us live and work as a successful team of franchisees. Even though we might have our own pending cases, we should not forget that we have all vested interest in the brand and the future of our businesses. We should try to work hand in hand with our franchisor to resolve our differences to both or mutual benefits. I hope and pray that our franchisor is listening and paying attention.  After all, we both have the same goals, to run profitable businesses and provide for our families and loved ones.

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