Claims Of Franchisor Discrimination: Dead On Arrival
As a franchisee attorney I’m unable to even begin to put a number on how many times I’ve received calls from distressed franchisees claiming that they are victims of “unfair discrimination” by their franchisors. And, these callers
always have a strong view on the legality of such discrimination.“They aren’t allowed to discriminate; that is unfair competition; it is certainly illegal, isn’t it Mr. Goldstein?” As soon as I hear the word “discrimination” I begin to
shake my head in preparation for what is almost always going to be an angry response from the caller after I tell him what I must: “In almost every case, discrimination by a franchisor against a franchisee is lawful.” In an attempt
to dull the anticipated harsh reaction from the franchisee caller, I quickly follow my comment with the entreaty: “Don’t shoot me, I’m only the messenger.”
The rich history in this country of combating pernicious racial and gender discrimination through the passage and enforcement of broad-sweeping “anti-discrimination” laws does not have an analogue in the franchise world. Indeed, almost every court that has heard an alleged franchisor discrimination claim has quickly cut the claim off at its knees. And, although there are a few states that have passed franchise legislation that touches on franchisor discrimination, these statutes, in my opinion, arguably make the franchisee’s burden in a discrimination case almost worse than it otherwise would have been had the franchisee been left to fend for himself under the common law. Every one of these very few statutes places its legal imprimatur on flat-out discrimination between franchisees so long as the franchisor shows that the discrimination was based upon “reasonable business distinctions” and was not “arbitrary.”
Even the most uncreative and incompetent of franchisors can easily cobble together an acceptable excuse for treating franchisees differently. Whether it is because a discriminating franchisor views one franchisee as bigger than
another; or as more business-like than another; or as more innovative than another; or as more sincere than another; or as more obedient than another; or as more capable than another; or as more enthusiastic than another; or as more
efficient than another, courts have consistently recognized these distinctions as lawful. So, for instance, even in the case where a franchisor blatantly discriminated by suing one franchisee but not others for violating the noncompetition
provision in the franchise agreement the court held that the franchisor had not acted unlawfully because the franchisor’s decision could have been a “rational business decision” based on the cost of bringing suit when balanced against the cost of possible recovery in such cases.
There have, however, been a few cases in which the franchisor’s alleged conduct has been held sufficient to state a claim under a state franchise statute. In one of these, a franchisee alleged that the franchisor rigged the bids for franchise stores so that the franchisor could exercise its right of first refusal to buy the stores and shut out the franchisee. In this case the franchisee successfully pled an actionable claim because the franchisee alleged discriminatory treatment by the franchisee's use of its right of first refusal. In another case, a court held that a franchisee’s claim of discrimination was viable because he alleged that the animosity between the manufacturer and the dealer’s son caused his nonrenewal of the franchise agreement.
Bottom line: if your case against your franchisor is going to live or die based solely on a franchisor discrimination claim you ought to make sure that you have picked out your casket before filing the case.
About the author: Jeffrey Goldstein, Esq. is a franchise attorney. Visit his website at www.goldlawgroup.com. Or email him at jgoldstein@goldlawgroup.com
Jeffrey M. Goldstein represents clients in commercial complex litigation matters across the country. Mr. Goldstein is recognized as one of the top franchise litigators in the country. Mr. Goldstein has extensive experience in representing clients in state and federal courts in cases involving fraud, RICO, antitrust, encroachment, and wrongful termination. Mr. Goldstein also has an active practice in state and federal appeals cases. Mr. Goldstein practices as a franchise lawyer in complex litigation cases representing only franchisees and dealers. Although Mr. Goldstein appears in courts in a pro hac vice capacity depending on the state, he also has direct access to New York, Pennsylvania, Massachusetts, and the District of Columbia (DC), Washington, where holds Bars for those states.
In addition to his litigation practice, Mr. Goldstein counsels and advises clients in franchise and distribution matters. Mr. Goldstein has represented clients across the United States in almost every leading franchise system. Mr. Goldstein also is retained to counsel many national independent franchisee associations. Mr. Goldstein has also served as an expert witness in several federal court franchise cases.
Mr. Goldstein graduated magna cum laude from Bucknell University with dual degrees in Philosophy and Economics in 1979. In 1983, he obtained his Juris Doctorate from Boston University School of Law, where he also simultaneously received his Masters Degree in Economics.
You can reach Jeffrey M. Goldstein at (202) 293-3947 or email jgoldstein@goldlawgroup.com. His firm's website is www.goldlawgroup.com.
The Goldstein Law Firm is one of a handful of law firms in the country that represents only franchisees & Dealers. Not every franchise lawyer is a franchisee lawyer. Almost all law firms specializing in franchise law represent either solely franchisors or both franchisors and franchisees, but not solely franchisees & dealers. The philosophy of The Goldstein Law Firm is that all of our franchise attorneys' effort should be focused on advocating for the rights of franchisees, not on cutting new law for franchisors who are very ably represented by the largest law firms in the world. The Goldstein Law Firm offers its franchisee and dealer clients a consistent and unclouded commitment to the cause of franchisees. On a national basis there are merely a handful of franchise lawyers who truly represent only franchisees & dealers. As a franchisee lawyer, Jeff Goldstein is one of these rare franchise lawyers who does not also represent manufacturers and franchisors.
GLF specializes in:
General Franchise and Distribution Antitrust violations
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Unfair Franchisor competition
Franchise and Distribution Trademark violations
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(202) 293-3947
In those cases in which Jeff is retained to litigate franchise law questions, he appears in courts around the country either in a Pro Hac capacity, or through his direct membership in the Bars of New York, Massachusetts, District of Columbia, Washington, and Pennsylvania.
Comments
OK But
In franchising it seems that discrimination is more of a [wide-spread] tactic used to penalize naughty franchisees and often used as part of a larger churning process. Our current Battery World saga is a classic example but such tactics are constantly reported as an element of franchisee disputes in many systems.
It is abusive and sometimes extremely abusive and at times, financially devastating for targeted franchisees. But I cannot find a case in Australia where it has been pursued and from the reading here it suggests a similar situation in the States. The ACCC here will advice [verbally] that such acts are ‘a breach’ but of what I am not sure as it is not dealt with clearly in our franchising law.
OK, so these cases are not apparently winnable and lets face it; where there is obvious discrimination there are typically far greater causes for action. But does the inability to successfully pursue acts of discrimination represent a failing in law that needs review?
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Discrimination
Discrimination between franchisees I think is covered by s51 of the Trade practices act- it is considered evidence of unconscionable conduct.
As many of us know, unconscionable conduct is expensive to prove and difficult to intrepret- hence the suggestions to include examples in the latest round of franchising reforms.
One good example of discrimination that springs to mind is where one franchisee is allowed to breach the contract terms by servicing clients in another franchisees territory where others have the book thrown at them for doing the same.
Regardless of any creative use of "rational business decision making" franchisors are risking much more than they realise when they treat franchisees differently, expecially when it involves one franchisee breaching the contractual rights of another and taking clients from them.
They risk non compliance in other areas, by franchisees who would normally be compliant, they risk in- fighting and sabotage and they risk angry franchisees airing the systems dirty laundry and lose any chance at credibility during mediation.
Franchise systems that have little in the way of support and where business training comes from other franchisees and not the head office have an even greater risk of disastrous consequences when they discriminate as they risk destroying the support structure that is crucial to turnover.
Picking and chosing who is "allowed" to breach the contract and who isn't is a recipe for encouraging the franchisees to pick and choose what they will and wont be compliant with.
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At the End of the Day
Boudica: Valid points; but, at the end of the day it comes down to size and dollars; those franchisees who have both will always come out on top. And, if one puts aside the injustice and unfairness of discrimination, an affirmative, well-thought-out discrimination program can actually grow a system. Hard to argue that a franchisor's decision to seek out and nurture those who are more competent and financially-stable is irrational. The discrimination allows the franchisor, much like the freemarket, to reward those who contribute and who can in the future contribute more to the system. The churning associated with discrimination rarely results in "new" franchisees "staying away." The lure of instant profits blinds most new franchisees to reality; the reality is that franchisees are many times being used to infuse a few bucks into the system. A few bucks in this market; another few bucks in another market; and then another few bucks in even another market puts dollars in the tills of franchisors. So long as franchisees continue to ignore the market realities and risks associated with the purchase of a franchise, their buying decisions will be disconnected from the "reputation" of the system. Thus, there is very little cost to franchisors of discriminating. Best regards, Jeff
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Business risk assessment
Jeff,
I agree, unequivocably. Accurate pre-sale risk assessment is the dominant issue in franchising:
all investors, even/especially mom-and-pop ones are 100% responsible for determining the relevant business risks that could occur during the term of the agreement.
But it is a 2 Step process, isn't it?
Yes the diagnosis of the risks (high, low or uncalculatable) is important but, I would suggest, the access to that information/expertise is a significant challenge as well for non-credence good investors.
Tradename-specific or management team reputaions would be of value as a proxy for total risk if they were unchanged over the life of the contract. Unfortunately, that's a big if.
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Business risk assessment
Jeff,
I agree, unequivocably. Accurate pre-sale risk assessment is the dominant issue in franchising:
all investors, even/especially mom-and-pop ones are 100% responsible for determining the relevant business risks that could occur during the term of the agreement.
But it is a 2 Step process, isn't it?
Yes the diagnosis of the risks (high, low or uncalculatable) is important but, I would suggest, the access to that information/expertise is a significant challenge as well for non-credence good investors.
Tradename-specific or management team reputaions would be of value as a proxy for total risk if they were unchanged over the life of the contract. Unfortunately, that's a big if.
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Hi Les; Good Point on the Credence Good Concept
Hi Lee: You raise an interesting point with many economic theoretical implications. It’s interesting that on the surface, to me, the sale and purchase of a franchise contains components of all three economic classifications: search goods, experience goods and credence goods. The traditional examples given for these, respectively, are a consumer product off the shelf, a restaurant and a surgeon.
With regard to the “search good” component, there are a few, but only a few, franchises that will allow a franchisee purchaser to evaluate its features, benefits and characteristics before a purchase.
With regard to the “experience good” component, a franchisee purchaser cannot easily determine the qualities and worth of the franchise until after he purchases the franchise; however, he is readily able to do so after the purchase.
“Experience goods” pose difficulties for consumers, in this case the franchisee purchase, in accurately making consumption choices. The lower price elasticity of experience goods (consumers fear lower prices are a proxy for poor quality goods or services) leads to higher-priced and lower quality goods and services (here, franchises).
With regard to the “credence good” component, many franchises fit this mold. Under this category the franchisee would be wholly unable to determine the quality of the franchise both before and after the purchase of the franchise.
It is with respect to the latter that government intervention in the form of pumping information into the market and regulating certain aspects of the relationship would be helpful. However, the FTC rule, and its failure to provide a private cause of action, as well as the almost total uselessness of the disclosures in the UFOC, have maintained the market failure associated with this credence good (the sale of franchises). Unfortunately the costs of this market failure fall disproportionately on the backs of franchisees. I do believe, however that the market failure would perhaps be not as great if franchisor management remained constant. With regard to pre-sale expert assistance, this is a "luxury" that an overwhelming number of franchisees choose to ignore when purchasing a franchise. They don't want anyone -- lawyer, consultant or other expert -- to blow their belief that in only a year or so they will be as rich as Midas. In some sense, by actively avoiding assistance, it is arguable that they already know the pitfalls, but proceed nevertheless. The tree is going to fall, but I'm praying it doesn't fall on me. Lots of interesting issues. Best regards, Jeff
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Negative externalities
Jeff,
While there are many franchisees that have failed to enlist pre-sale experts, I think that explanation is wearing thin in a reputation sense. Once I started accumulating the major causes of franchisee business failure, I couldn't help be struck by their breadth and depth. In a medical/business analogy, the individual's "cause of death" seemed to recede as the juggernaut of dozens of hazards mounted.
Darwin saw natural selection as a mechanism for evaluating genetic variation.
Modern franchising's dynamic (opportunism fueled by sunk costs) is made concrete via a bewilderingly complex set of risks.
The consequences of this overgrazing had traditinonally been able to be externalized but that may not continue indefinately.
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Negative externalities
Jeff,
While there are many franchisees that have failed to enlist pre-sale experts, I think that explanation is wearing thin in a reputation sense. Once I started accumulating the major causes of franchisee business failure, I couldn't help be struck by their breadth and depth. In a medical/business analogy, the individual's "cause of death" seemed to recede as the juggernaut of dozens of hazards mounted.
Darwin saw natural selection as a mechanism for evaluating genetic variation.
Modern franchising's dynamic (opportunism fueled by sunk costs) is made concrete via a bewilderingly complex set of risks.
The consequences of this overgrazing had traditinonally been able to be externalized but that may not continue indefinately.
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Hi Les; Externality?
Hi Les: Wanted to try to understand your point about the theoretical externality. If you're saying that the costs of "purchasing a franchise" (the commodity that would be used on the supply and demand curve) have been externalized over time, that would indicate that "too many franchises" have been sold, as if the costs underlying the supply curve had been fully reflected, the optimal level of "sales of franchises" would have been less than exist now, where the externalized costs are not being reflected in the supply curve. So, if you're predicting that these external costs will not longer be externalized, this will lead to fewer franchises being sold. However, the facts are in conflict with this theoretical program, as more and more franchises are offered every day, and, they always seem to find somebody to purchase them. There is simply no significant private or public hand that will force franchisors to internalize the externalities. Good point, tho. Best, Jeff
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Total sold may hide serious market distortions
Jeff,
I think two things are happening:
- low-quality offerings are sold (that shouldn't be) and
- high-quality sales are not happening that should happen.
Since no independent source records the total or net amounts, we cannot know what is happening. I think we can agree that the "sincerity" of statistics has a fairly checkered past.
Imperfect pre-sale information, no matter the source, causes sub-optimization in investment decision-making. The good cannot be differentiated from the "bad" offers.
Both "sides" (if that distinction exists) suffer because information obstacles distort efficient/effective investment decisons. Franchisees and franchisees suffer when the markets are distorted although the visibility and timeframes may vary for each party. Other industries have had a cataclysmic drop in public faith (ie. the eat bankers meme).
The source of distortions is irrelevant: markets will depress all franchising (v. other investment options) because of this systemic differentiation failure.
btw: Type 1 franchise create negative externalities for the both sides via memory and reputation, and not just the hapless individual investor(s).
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Total sold may hide serious market distortions
Jeff,
I think two things are happening:
- low-quality offerings are sold (that shouldn't be) and
- high-quality sales are not happening that should happen.
Since no independent source records the total or net amounts, we cannot know what is happening. I think we can agree that the "sincerity" of statistics has a fairly checkered past.
Imperfect pre-sale information, no matter the source, causes sub-optimization in investment decision-making. The good cannot be differentiated from the "bad" offers.
Both "sides" (if that distinction exists) suffer because information obstacles distort efficient/effective investment decisons. Franchisees and franchisees suffer when the markets are distorted although the visibility and timeframes may vary for each party. Other industries have had a cataclysmic drop in public faith (ie. the eat bankers meme).
The source of distortions is irrelevant: markets will depress all franchising (v. other investment options) because of this systemic differentiation failure.
btw: Type 1 franchise create negative externalities for the both sides via memory and reputation, and not just the hapless individual investor(s).
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Both Sides
Hi Les: With regard to the suboptimal outcome and both sides suffering; that could be in the long-run (Adam Smith: "In the long run we're all dead"). However, in the shortrun, franchisors make out better, especially since many of them are operated with very short-run time horizons (thus the long run costs associated with the suboptimal outcome are not internalized). Hence, too many horror stories. The market externality here can be addressed far better by the government regulation focusing on the provision of information as well as ongoing franchise relationship and divorce; however, there is no strong lobby group of franchisees to bring this about. And, since in the shortrun suboptimal 'excess' profits are earned by franchisors, this permits very rational and sustained lobbying of legislative bodies by franchisors. The issue is not just one of the government not wanting to impose increased costs on "business"; it is also an issue of the government going thru the charade of "forcing" information into the market thru disclosures in a UFOC, which, after they've been worked over by franchisor lawyers, are almost entirely useless. Item 20 in the UFOC regarding information about present and former franchisees is one of the most important items, yet there are too many exceptions. Almost every franchisee who settles with a franchisor has to sign a "gag order"; thus, even in the remote case where a prospective franchisee finds one of the most relevant former franchisees they've been gagged. Better yet, the required disclosure on this issue is to state: "We (the franchisor) might from time to time require franchisees to sign gag orders." Very helpful. Best, Jeff
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Gag Orders
In Australia it is now required by the Franchising Code of Conduct, a mandatory code, that disclosure includes copies of any such agreements that would come into play. This was an amendment in March 2008.
Many franchisors missed it. That could be interesting.
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Gag-Orders
Hi Ray: Does the amendment require that the entire agreement in which the gag-order is included be disclosed? And, does it require that the contact information for each franchisee who has been gagged also be identified? Without at least the latter, the revelation of the existence of the "form language" of a gag order will not allow the most relevant information -- the facts that gave rise to the settlement and subsequent gagging -- to be discovered. Best, Jeff
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In short Jeffrey
‘No’ and ‘No’.
You are quite right in regard to the total [lack of] value of the amendment concerning pre-investment due diligence. We don’t even know without ‘test’ how a Court will view a breach of a gag order that was not disclosed. It will be up to a franchisee to fund a defense and otherwise, if under present legislation a franchisor was found to have neglected full disclosure as required by the Code typically the huge deterrent of being directed to undertake ‘compliance training’.
Summary of Code Amendments 2008
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Hi Ray
Since under the FTC Rule there is a way for them to "squirrel" out of having to disclose whether they've not identified or listed certain franchisees who do have confidentiality clauses, it seems that the FTC in its infinite wisdom has decided that it's just another type of information, that, altho it would be very helpful to a frlanchisee, doesn't need to be disclosed after all of the exceptions are taken into account. Best, Jeff
jgoldstein@goldlawgroup.com
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Discrimination Down Under
"Thus there is very little cost to franchisors of discriminating"
The Australian Competition and Consumer Commission filed proceedings against franchisor, Allphones. The ACCC's case is that the following conduct is unconscionable and therefore unlawful: Policies which target certain classes of franchisees.
<blockquote>Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17 (19 January 2009) </blockquote>
The ACCC also claimed that Allphones had unfairly discriminated against its franchisees when it instigated a "no dickheads" policy aimed at weeding out the worst 10% or disloyal franchisees. The ACCC gives this as an example of unconscionable conduct under the Trade Practices act in its submission to the federal court.
As I tried to illustrate with my example, it is not necessarily the case that the damage caused by discrimination only shows itself when it comes to luring potential franchisees.
In systems with poor support that unofficially rely on mentoring between franchisees to provide the needed knowledge and skills, such discrimination could cost a lot in terms of having to fill the support void when franchisees are pitted against each other due to the discriminatory behaviour.
The same applies in systems where stock shortfalls tend to be managed by franchisees' shifting stock between franchises, where franchisees heavily supplement marketing activities with regional franchisee collectives and where a high level of cohesion and collaboration between franchisees underpins the entire systems operation.
If the franchise system relies too heavily on co-operation between franchisees to manage it's day to day business then the cost of such discrimination is much greater than just upsetting a few people and scaring off buyers, which as you correctly point out, rarely happens anyway under the current market dynamics.
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Hi Ray: It represents a failing, but it will not be redressed.
Great question (and also a great article you wrote; very interesting and well-written). With regard to whether the inablity to successfully pursue an act of discrimination represents a failing in the law, as with most things, it depends upon who you ask. Franchisors will argue that they would be foolish to engage in irrational discrimination as the free-market would penalize the franchisor vis-a-vis other franchisors who do not discriminate. They would also argue that rank discrimination would be irrational because it would undermine the legitimacy of the very system that they own and operate.
Accordingly, the standard economic analysis of this would be that the free-market will bring about the "most efficient" levels of discrimination, and any attempts to regulate it would result in the market functioning in a less than optimal manner. They would also argue that even were the optimal levels of discrimination to be lower than what exist now, the resources that would be consumed by courts, franchisors, and franchisees associated with franchisees running all of the country filing lawsuits would dwarf any aggregate economic benefits that would result from a diminution of the levels of discrimination.
The franchisees who are most vulnerable to this "efficient" market conduct are the smaller, less capitalized outfits. Once the franchisor has taken from the franchisee what it needed in that particular market (usually money, blood, sweat and tears), the franchisee will be "retired" in favor of a more heavily capitalized or competent franchisee. Is this fair? Absolutely not. Do the state laws that "ban" discrimination help? Barely, if at all. People's lives and fortunes are destroyed by discriminatory conduct, and the wrongful terminations that inevitably result.
So, what does that leave us with? A flat-out breach? (I haven't yet seen a franchise agreement that granted a right to the franchisee that he will not be treated in a discriminatory manner). Oh yeah...don't forget about the covenant of good faith and fair dealing which has been jammed up almost every franchisee's hind-quarters over the last 10 some odd years. That cause of action to redress discrimination is useless as well. So, if the goal of the law is fairness, then the law needs review, as you ask. Will there be any meaningful change toward this end? Not likely in this life time. Franchisees can't even get a private cause of action under the FTC Rule.
Best regards, Jeff
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Reply to Milton D -- Re: Discrimination
Hi Milton: The case you requested is below. Best regards, JeffTractor and
Farm Supply, Inc., and Laura Evelyn Vance v. Ford New Holland, Inc.,
U.S. District Court, W.D. Kentucky, ¶10,643, (Mar. 15, 1995)
¶10,643.
U.S. District Court, Western District of Kentucky, Bowling Green
Division. Civil Action No. C-94-0046-BG(H). Dated March 15, 1995.
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Why Doesn't Everyone Know About Franchisor Discrimination
I'm sitting here researching my options for dealing with a termination package that arrived 2 days ago. The real issue is my franchisor is incompetant and they resent the fact that I've successfully delivered (for a fee) marketing services to my peer franchisees for 2 and a half years.
The focus of my termination package is my vendor business - they plan to withhold the sale of my franchised business unless I agree to stop talking with and selling marketing services to other franchisees. Clearly this is outside the scope of my franchise agreement so I may ultimately have to forgoe the sale.
The pretext of my termination is I have failed to send them my e-Newsletters for last 2 months (May & June) and here's how crazy this is:
- I've been publishing my eNewsletter since 2006 (newsletter archive) and after 5 and a half years, they've decided I need to send them my newsletters before distributing?
- Franchisor has been promoting owners use Constant Contact to do their own newsletters ... and never stated we had to review these with franchisor, nor do they require other owners writing their own newsletters to do this which is where discrimination comes.
- After launching the newest corporate website, they had the web developer send an email blast to ... they bragged about collectively having more than 100,000 emails. It bombed and they found they had fewer than 25,000 valid emails and worse, were unable to give owners a list of invalid & unsubscribes which hurts every owner (my subscribers all opted out of this email blast).
- Next attempt was contracting with MarketSmart to do corporate newsletters and they actually bullied 88 owners into signing up ... the sales pitch being it's free (really $49/mo account management fee). Franchisor was irregular on when they sent over content so no obvious schedule for about a year but told maybe every 4 to 8 weeks ... as owners didn't get copies of what went to their customers.
- MarketSmart went out of business in February so I have the only newsletter service available to owners ... oh but again, they're being told to use Constant Contact. Worse is they failed to get opt-out information from MarketSmart so owner email lists are tainted. 3 of the last 4 subscribers I've brought on board have had accounts closed and I've had to switch to a new vendor to support these businesses, with a more complicated process for weeding out things like AOL email addresses. The franchisor has effectively destroyed the lists that owners have diligently built ... but of course, we can't do anything about this.
- Numerous complaints about quality of franchisor letters and some of my customers suggested they use my newsletter service but they never responded to one quote I gave them years ago.
- In April via email they told me I had to send them newsletters for all my subscribers ... but they have no relationship with that vendor business.
- Now it's cause for termination as I'm in violation of reviewing marketing materials with them?
If anyone out there has input, ideas or even better, reference to anything to support my case, let me know.
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Why Doesn't Everyone Know About Franchisor Discrimination
I'm sitting here researching my options for dealing with a termination package that arrived 2 days ago. The real issue is my franchisor is incompetant and they resent the fact that I've successfully delivered (for a fee) marketing services to my peer franchisees for 2 and a half years.
The focus of my termination package is my vendor business - they plan to withhold the sale of my franchised business unless I agree to stop talking with and selling marketing services to other franchisees. Clearly this is outside the scope of my franchise agreement so I may ultimately have to forgoe the sale.
The pretext of my termination is I have failed to send them my e-Newsletters for last 2 months (May & June) and here's how crazy this is:
- I've been publishing my eNewsletter since 2006 (newsletter archive) and after 5 and a half years, they've decided I need to send them my newsletters before distributing?
- Franchisor has been promoting owners use Constant Contact to do their own newsletters ... and never stated we had to review these with franchisor, nor do they require other owners writing their own newsletters to do this which is where discrimination comes.
- After launching the newest corporate website, they had the web developer send an email blast to ... they bragged about collectively having more than 100,000 emails. It bombed and they found they had fewer than 25,000 valid emails and worse, were unable to give owners a list of invalid & unsubscribes which hurts every owner (my subscribers all opted out of this email blast).
- Next attempt was contracting with MarketSmart to do corporate newsletters and they actually bullied 88 owners into signing up ... the sales pitch being it's free (really $49/mo account management fee). Franchisor was irregular on when they sent over content so no obvious schedule for about a year but told maybe every 4 to 8 weeks ... as owners didn't get copies of what went to their customers.
- MarketSmart went out of business in February so I have the only newsletter service available to owners ... oh but again, they're being told to use Constant Contact. Worse is they failed to get opt-out information from MarketSmart so owner email lists are tainted. 3 of the last 4 subscribers I've brought on board have had accounts closed and I've had to switch to a new vendor to support these businesses, with a more complicated process for weeding out things like AOL email addresses. The franchisor has effectively destroyed the lists that owners have diligently built ... but of course, we can't do anything about this.
- Numerous complaints about quality of franchisor letters and some of my customers suggested they use my newsletter service but they never responded to one quote I gave them years ago.
- In April via email they told me I had to send them newsletters for all my subscribers ... but they have no relationship with that vendor business.
- Now it's cause for termination as I'm in violation of reviewing marketing materials with them?
If anyone out there has input, ideas or even better, reference to anything to support my case, let me know.
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Smarter Option
Tina; wouldn't it just be smarter for them to hire you to create a platform by which all the franchisees could access and send out local newsletters? Be dumb to get into a legal slanging match about this one.
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Of course you are right, Michael, but how frequently do
pissed off people do smart things?
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Uh, never?
Good point, Richard who notes that I am constantly preaching both what is reasonable and yet unobtainable!
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Not Invented (Controlled) Here Syndrome
Michael, At one time I was asked how much it would cost for me to write the newsletters. I put together a thoughtful proposal Including an editorial calendar, monthly newsletter content and more. I sent my proposal and made one follow-up phone call and never even received a professional thanks for your proposal. I guess anything more than free is too much.
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Not Invented (Controlled) Here Syndrome
Michael, At one time I was asked how much it would cost for me to write the newsletters. I put together a thoughtful proposal Including an editorial calendar, monthly newsletter content and more. I sent my proposal and made one follow-up phone call and never even received a professional thanks for your proposal. I guess anything more than free is too much.
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Franchisee Association?
Tina;
Do you have a franchisee association? If not, a library of articles from which some franchisees can use for their own local marketing newsletter would make a good start on building one.
Send me the proposal if you still have it.
I hope you are taking the threat of termination seriously and have hired a proper franchisee attorney.
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animosity
What is the specific case in which the animosity between the manufacturer and the dealer's son was found to be a basis for discrimination? I would like to review the details.