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The Importance of Franchisee Associations

RPurvin's picture
Posted Fri, 2009/05/08 - 02:25 by RPurvin
Effective and respected independent franchisee associations that are recognized participants in a collaborative franchise culture are deserving of significant marketplace recognition. The AAFD's own purpose is fundamentally to support and empower strong effective franchisee associations. The AAFD supports scores of franchisee associations, most of which organized as chapters of the AAFD. Forming and supporting owners associations is our predominant job. Unfortunately, some associations and chapters we support involve questionable and often failing business models. The members of these franchisee associations are intent in engaging their franchisors to fix or repair faulty business models--and the AAFD Seal is used as a significant inducement to attract the franchisor to the dialogue. The AAFD Fair Franchising Seal is an important recognition of franchise systems that recognize and respect independent owners associations. The Seal, as well as AAFD Accredited Contracts, are focused on fair contracts. We don't market these recognitions as the best businesses or even the best franchising companies. Indeed the Fair Franchising Seal is really designed to improve the agreements of existing owners. AAFD Accredited Contract recipients must offer a franchise agreement that substantially conforms to the AAFD Fair Franchising Standards, including a commitment to recognize and support in independent franchisee association -- a fact my friend Mr. Webster either discounts or fails to acknowledge. My personal dream or vision for AAFD Accreditation is that we become the minimum standard a franchisor must meet to go to market--the floor all franchise systems must meet rather than a top ten list. We compare the AAFD Seal to the UL symbol that any electronic device must earn before going to market--as opposed to the Malcolm Baldridge Award for the best run companies! Just as any company that makes FTC disclosures can go to market, we intend that marketplace will not allow any company to succeed in the marketplace without AAFD Accreditation--including the commitment to recognize and support an independent association. This is not to say that the AAFD ignores the quality of a company's business model. The AAFD offers customized franchise opportunity reviews based upon the AAFD's Eight Criteria for franchise selection. These 8 criteria are available at our website and are all business considerations that the AAFD endorses. The AAFD also offers its Roadmap to Franchise Selection--our step-by-step checklist for franchise selection due dilligence. There have been many interesting questions posed on BMM which I intend to address over the next several days and weeks -- I truly don't know where some of the BMM contributors find the time! Coming soon is a detailed explanation on the AAFD's vetting process for Seal Recipients. Robert Purvin Chair, Board of Trustees American Association of Franchisees & Dealers
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Bob. by Howard R. Morrill
Submitted by Howard R. Morrill on Fri, 2009/05/08 - 11:53.
You said: "The members of these franchisee associations are intent in engaging their franchisors to fix or repair faulty business models--and the AAFD Seal is used as a significant inducement to attract the franchisor to the dialogue."
But the problems with most franchise systems are predominantly economic. There is no way to feasibly cut an undercapitalized (or undercommitted) franchisor in for a piece of the franchisee's action in a low margin business that competes with others on price and location and which offers what are basically undifferentiated goods and services to the public. The answer in those systems isn't to rearrange the deck chairs on the Titanic, but to get to the lifeboats. Interestingly, my thinking on this topic was greatly influenced by reading The Franchise Fraud--which I bought in hardback.
Business Model by michael webster
michael webster's picture
Submitted by michael webster on Sat, 2009/05/09 - 08:50.

Howard writes: "But the problems with most franchise systems are predominantly economic. There is no way to feasibly cut an undercapitalized (or undercommitted) franchisor in for a piece of the franchisee's action in a low margin business that competes with others on price and location and which offers what are basically undifferentiated goods and services to the public. "

Then the franchisees either have collectively increase the pie, take their share, or simply go independent.  All of which requires collective action, of one sort or another. 

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Going independent does not require collective action by Howard R. Morrill
Submitted by Howard R. Morrill on Sat, 2009/05/09 - 17:06.
It's been far more typical in my practice to help individuals rather than groups go independent.
Interesting by michael webster
michael webster's picture
Submitted by michael webster on Sat, 2009/05/09 - 20:56.

That is interesting, Howard.  My experience is just the opposite.  

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Accredited Contracts and Failed Business Models by michael webster
michael webster's picture
Submitted by michael webster on Fri, 2009/05/08 - 08:58.

Bob writes: "AAFD Accredited Contract recipients must offer a franchise agreement that substantially conforms to the AAFD Fair Franchising Standards, including a commitment to recognize and support in independent franchisee association -- a fact my friend Mr. Webster either discounts or fails to acknowledge."

Yes, I discount entirely because "a commitment to recognize and support" has no bite.

Fundamentally, I see no point in dangling the hope of an IndFA in front of a franchisees in a losing business proposition.  They simply need help in getting out of the crummy business deal.  These are litigation groups and should be identified as such. 

Bob writes: "We compare the AAFD Seal to the UL symbol that any electronic device must earn before going to market--as opposed to the Malcolm Baldridge Award for the best run companies!"

I have more modest goals because I don't believe that the current members of the AAFD have any recognized skill in determing who is the best run franchise system.  The grading of a franchise contract is very important to a well run IndFA seeking leverage to change their overall relationship with the franchisor.  

The greatest leverage an IndFA has is to provide objective reasons for refusing to endorse the purchase of a new franchise because of the poor quality of the new franchise agreement.  This is akin to the excellent work AAOHA with their 12 Points of Fair Franchising and getting real contractual changes, starting with liquidated damages.

More IndFAs who are interesting in negotiating a relationship change with their franchisor should start by getting the AAFD to grade and review their franchise contract.  This is where the leverage begins.   

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"


re Accredited contracts vs. failed models by Nick Bibby
Nick Bibby's picture
Submitted by Nick Bibby on Fri, 2009/05/08 - 13:21.
Michael, you have essentially summed up my position/feelings short of making a definitive statement that 'franchise success must precede contract success' if the goal is truly 'total quality franchising'. I hold some hope the organization will see that even a fit tail can't wag the dog, especially an unhappy dog. I also hold some hope that the impetus for further change will come from the fact that AAFD has actually experienced some wins and has new blood. If the focus stays on the tail then I think new blood and the organization will peter out, or at best stay the same). Time will tell. It appears from my limited vantage point that you are the voice shouting a message closest to mine, and if you can't be acknowledged then it's a signal to others (with similar opinions) that change is not imminent.

Nick Bibby founded BibbyGroup.com, an organization dedicated to franchise and entrepreneurial excellence.
 
DDIFO Says AAFD Worthwhile by Mr. Blue MauMau
Mr. Blue MauMau's picture
Submitted by Mr. Blue MauMau on Fri, 2009/05/08 - 00:20.
DDIFO's McCarthy and AAFD's Purvin

The DDIFO, the independent franchisee association for Dunkin' Brands, announced yesterday that it was quite impressed with the AAFD conference in San Antonio and plans to take part in the association.

"I was impressed with the AAFD and quality of the members and the organization,” said McCarthy upon his return from the 4-day conference." -DDIFO Blog

The chairman of DDIFO, declared:

"McCarthy said the organization was “clearly more impartial than I thought them to be. They make a sincere effort to look at both perspectives in discussions of the relationships between franchise owners and their franchisors.”

McCarthy continued, “I made a lot of valuable contacts with leaders in other franchise systems that we can learn more about how well they work with their respective franchisor.”

“Based on my experience I would support DDIFO joining the AAFD and we should work more closely with them in helping us develop our organization.”