Independent Franchisee Associations - Research Forum

March 9th, 2009

I am creating this forum in the hopes of engaging others that are interested in discussing the role and impact of independent franchisee associations on the franchise system. I am a doctoral candidate at Boston University conducting research on independent franchisee associations (IndFAs) for my dissertation. I welcome interesting research questions and debate on the topic. Hopefully in this forum we can collectively shed light on a unique organizational unit within the franchise system. To start some debate I post the following questions:

What are the key variables that impact the successful formation and long-term success of IndFAs?

Do all franchise systems need IndFAs?

How do IndFAs impact the franchisee – franchisor relationship?

For my research I am also looking to interview any individuals with key insight and firsthand experience IndFAs. If anyone has firsthand experience in these associations and is willing to talk with me or can recommend someone who will it would be greatly appreciated. I must stress that my interest and research is purely academic and is regulated by the Boston University institutional review board (IRB). Therefore I take very seriously the welfare of my subjects and the protection of their identities and responses. All information that is provided remains anonymous.

Regards,

Ben Lawrence
Boston University, School of Management
Department of Marketing, Office 668
595 Commonwealth Ave
Boston, MA 02215
benl@bu.edu

Keys of a successful Independent Franchisee Association?

Ben,

Glad to see you start a scholarly forum discussion on independent franchisee associations and what they do for franchise systems.

You asked, "What are the key variables that impact the successful formation and long-term success of IndFAs?" I'll share with you what Robert Purvin's answer is, after 16 years of founding and leading the American Association of Franchisees and Dealers.

While many have tried to paint the AAFD as a 'union organizing' association (a label that would offend many of our small business members), in fact, the AAFD's strength emerged from a dual commitment:

i) strong owners associations with a significant voice and negotiating leverage within their franchise systems; and

ii) associations that distinguish themselves as positive citizens and investors in their franchise systems dedicated to better franchising (as opposed to simply focused on franchisee rights).
From page 247, The Franchise Fraud: How to Protect Yourself Before and After You Invest.

If I see an interesting article on this subject, I'll post it here. To get the discussion rolling, let me clarify who are the franchisee associations. Here is Blue MauMau's list of some 120+ independent franchisee associations that is in our franchise encyclopedia. (Ben contributed some of the names, as did Janet Sparks, Michael Webster and myself. Big thanks to Michael, Janet and more recently Ben.)

on March 9th, 2009

IndFA success

Bad timing on my part as I had recently posted a question at;

http://www.bluemaumau.org/indfas_and_im_all_right_jack

I look forward to much response to this topic. It may be important to Ben but this subject is extremely important to franchising and while it is often referred to in threads everywhere at BMM - it is one topic that should always be shown to be critical to better franchising and one of the few avenues that offers any protection against abuse of franchisor power.

My question is; why are franchisees reluctant to accept that need and then whine that they are 'in the poop by choice and by themselves' and pay the penalty when it is too late.

Posted by Ray Borradale on March 11th, 2009

IndFA

Ray,

I agree that the role of IndFAs are understudied both in the academic franchising literature and in practice. The one domain in which the role of IndFAs have been written about is the ABA (American Bar Association) forum on franchising annual proceedings. If anyone wants information on this literature please let me know.

This is an interesting question you pose - and one that many advocates of collective action face. I propose the ease and benefits of freeriding are the cause. Identified leaders or members of an IndFA may be more susceptible to punitive actions while non-members who still benefit from the public good of the organization bear no risk of persecution. Therefore it may be useful to systematically look at IndFAs that have successfully built and maintained high membership in their associations and the evolution process of the such organizations.

Ben Lawrence
Doctoral Candidate
Boston University

Posted by BenLawrence on March 11th, 2009

FAs work

Ben the two greatest factors that stop the formation of an IndFA are fear and selfish complacency. The ‘complacent’ franchisees in many systems disgust me and yet in healthy franchising these associations are accepted and often encouraged.

There are typically 3 factions within the most needy systems that comprise of franchisees who stand up (1) and generally get slaughtered because the majority want someone else to ‘test the water’ while they duck for cover (2) and also because of that often small element of ‘privileged’ franchisees who are encouraged to inform on any dissident franchisees (3).

The fear is real; or it will be when a rogue franchisor gets upset. Cases of ‘leading’ franchisees being ‘bounced’ out of their business for ‘bringing the ‘Brand’ into disrepute is far from uncommon. “Leading’ franchisees accepting the advice of the franchisor’s lawyers and selling up [at any price] are far from uncommon. But that is the nice approach.

Setting up franchisees for any breach through repetitious ‘standards inspections’ that find fault with minor system failures that would normally see any other franchisee receive ‘friendly advice’ to rectify [if anything]. Setting up vexatious customer complaints. Setting up ‘leaders’ so as to threaten reporting for contrived tax fraud. Private investigators employed to produce anything to support a contrived breach. Break & enters to steal computers. I’m sure other contributors could offer the full scope of activities used to shut down an FA.

The real rogue franchisor value in these efforts is to ensure that the entire network know what the consequences are when an FA is not wanted. Sadly; that is when they are most needed.

I am hopeful that many will contribute on the positives that franchisors and franchisees achieve through FAs. They work well to grow business, enhance the relationship and protect the integrity of the system and the investment for all parties.

It is all about consultation and communication. If the franchisor can convince an independent FA of the way forward then compliance delays are minimised and the relationship is maintained. If the franchisor listens to the FA [representing the network of franchisees] then often you will see better outcomes from the advice from the front line.

Posted by Ray Borradale on March 12th, 2009