Do Hotel Franchisees Need Independent Associations?

In the volatile world of franchisor/franchisee relations, reconciliation often seems hopeless because the franchisor usually has the upper hand.  Even the modest proposals embodied in the AAHOA 12 Points of Fair Franchising are seen as revolutionary and radical.

At the center of the dialogue between franchisors and franchisees are the sometimes invisible franchise advisory councils (FACs).  These organizations are created and subsidized by franchisors with the idea of fostering and controlling communication and franchisee participation.

As the name indicates, FACs are usually purely advisory and their bylaws determine issues the franchisor will address.  The franchisor usually shapes meeting agendas and appoints the franchisee members who serve on the FAC.

Franchisors, of course, claim that the FACs are a progressive force in promoting good relations and cooperation with franchisees, some of whom are likely to define them as little more than window dressing.  FACs can be an inexpensive mediation tool to solve conflicts in the entire system, because they enable the franchisee, who has hands-on experience, to be able to filter information back to the franchisor.  According to some industry observers, those tools can get tarnished pretty quickly, especially if the creation of an advisory council is nothing more than an extension of the franchisor’s power in a polite “Rubber Stamping” process.

It has come to my attention that over the past ten years significant improvements in franchise systems were due to one major factor: the formation of independent franchisee owner associations.  In 1992 in all U.S. industries, there were fewer than 30 independent associations; by 2007 about 300 such groups had formed.  In the past, franchisors turned their backs on these associations, claiming their own franchise advisory councils were sufficient outlets for complaints.

But, as corporate attitudes hardened, Dairy Queen, Burger King, KFC, 7-Eleven, GNC, Subway, Dunkin Donuts, Quiznos, UPS Stores, among other franchisees, have formed independent associations.

In hotel franchising there are three independent franchisee associations: 

1. EconoLodges of America Franchisee Association (ELFA) is a 28 year-old independent franchisee association (the oldest in the U.S.) 
2. Association of Starwood Franchisees & Owners North America (ASFONA) was formed in 1997 by owners of Sheraton and Four Points by Sheraton hotels in North America.  In January 2006, the Board of Directors approved a motion to expand ASFONA to include all brands in the Starwood Hotels and Resorts portfolio 
3. Owners 8 Association (O8A).  See Above.

About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services. Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management. He is a member of the prestigious International Society of Hospitality Consultants. His provocative articles on various hotel subjects have been published in Blue MauMau, the Cornell Quarterly, Lodging Hospitality, Hotel Interactive, Hotel-Online, AAHOA Lodging Business, etc. Don’t hesitate to call 917-628-8549 or email stanturkel@aol.com

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Franchise Advisory Councils: Powder Puffs or Powerhouses?