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Log In / Register | Apr 20, 2014

Independent Franchisee Associations Grow

Experts estimate that there are 300 to 400 independent organized groups of franchisees, which are increasing.

Julie Bennett of Franchise Times reports in the September issue that they range from “giants like the North American Association of Subway Franchisees serving almost 24,000 domestic units and run by a professional staff in Fairfield, Connecticut, to Expetec… an association of 24 franchisees.” Bennett reports that after years of getting hammered in court, IndFAs recently won several legal battles:

  • In 2010, Quiznos sandwich chain in Denver agreed to pay current and former franchisees a total of $206 million to settle lawsuits
  • In February, a Delaware court ruled in favor of the Association of Kentucky Fried Chicken Franchisees, in a dispute with KFC over advertising funds
  • And this July, a U.S. District Court in Connecticut ruled 170-member Edible Arrangements Independent Franchisee Association had the “legal standing” to sue its franchisor.

Attorney Justin Klein ([email protected]) who represents the Edible Arrangements franchisees, said the ruling is a significant victory for franchisee associations all over the country, because it gives associations the power to litigate claims on behalf of their members.

By banding together, franchisees are able to hire high-caliber attorneys and advisors - just like their franchisors, said Eric Karp, an attorney with Witmer, Karp, Warner & Ryan, which represents 12 national franchisee associations. The new Federal Trade Commission’s Franchise Rule also gives a boost to IndFAs, Karp said, because it requires franchisors with franchisee associations to include information about them in their Franchise Disclosure Documents.

Representatives of independent associations also helped push a Fair Franchising bill through the Rhode Island legislature three years ago and this June, Jim Coen, president of the 2,500 member Dunkin’ Donuts Independent Franchisee Organization, testified for a similar bill now under consideration by lawmakers in Massachusetts. “If you represent a significant organization with significant resources, elected officials will listen to you,” Coen said.

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