Alaska’s Halcro Case Shows Franchisee Associations Are Needed

As franchisees everywhere applaud the hard fought, long term and just outcome of this case, it is important that certain lessons be learned that might help prevent similar unnecessary disputes reach the stage that this case did. In my comments posted on October 22 in BlueMauMau, Avis Lawsuit Represents What's Bad in Franchising, I expressed my strong opinion that this long and very costly lawsuit never should have happened in the first place. Robert Halcro, first the victim and then the victor, upon hearing that the case was finally over and that his $19.2 million award was his, expressed his feelings that in the reality of franchising there are lessons to be learned.

Halcro commented, "The typical small operator (franchisee) probably could not fight a case like this one…." He went on to say, "Franchisees need to have an organization that will fight for their rights. They have got to feel stronger about the way they can get justice. They should get the respect they are entitled to". The message and lesson to be learned from his words is that franchisors have an opportunity to make a small investment in an "ounce of prevention" in order to avoid the very costly "pound of cure"----a nightmare scenario not unlike what Alaska Rent A Car was subjected to. The organization that Halcro advises that is so essential for franchisees to be part of typically comes about in two different ways.

Many enlightened franchisors create Franchisee Advisory Councils (FAC) as a method and a vehicle to communicate with and understand the concerns of their franchisees. They see the value in franchisee input and in having a forum to air out differences and most important, help avoid litigation. It has been my opinion for many years that franchisors simply cannot be effective without having a viable and essential advisory organization. Much has been written about the way to structure and to effectively work with an FAC to help achieve the mutual goals of franchisors and franchisees. Yet in spite of the obvious advantages, there are still too many franchisors, for reasons that I cannot understand, who do not choose to create or be party to an FAC and in some cases oppose the formation of one. The alternative then, too often leads to franchisees organizing their own franchisee organization and retaining legal counsel to represent them in what typically becomes a less friendly environment for a franchisor. Both franchisors and franchisees should heed Halcro's advice and create a franchisee organization. The most effective FAC 's are the ones formed jointly by both parties while the ones formed solely by franchisees are less likely to be as beneficial to both parties.

The prime purpose of any franchisee organization should be to make the relationship as mutually rewarding and respectful as possible. But as Halcro is advising, if there is to be a franchisor who chooses the approach that Avis did, then having an organization behind them is something a franchisee will need to have.