Defunct Concepts

Isn't StrawHat pizza a co-op?FuwaFuwaUsagi

I don't agree with you at all! I think this is just wishful thinking on your part.

The fact remains that most franchisees work long and hard days and don't have time to socialize with their fellow franchisees, and the franchisors like it that way. The franchisors want to deal with their franchisees on a one-on -one basis and it would scare the hell out of them if they thought their franchisees would join together in any serious collective bargaining.

This is why they so often just ignore the Network Associations and won't deal with them because the first time there are concessions, they know the franchisees will be back and the Association will gasin power.

Better to keep them divided and impotent to effect any real change and use the franchise agreements to keep them in line.

Someone indicated that dues to the AAFD or the AFD would help in gaining more power for franchisees and perhaps this is true. But, I believe that the policy of keeping the franchisees separated from each other and dependent upon the franchisor is central to franchising. The conflict of interest inherent in the franchisee's 100% ownership and the franchisor's 100% control silences franchisees in their own interests and the franchisors are very aware of this conflict that operates to their benefit.

The contract of adhesion gives them the clout and the control over these businesses in which they have no ownership and this control must be absolute to protect their position and profits to make up for their lack of any actual ownership in the network units.

It is a rumor that you are buying a a business of your own because it is the franchisor who controls the business in his interests in success and in failure. This is not hard to take if there are profits and you can sell your business at a profit but very hard to take when you are operating at a loss or break even to provide royalties, commissions, and fees for your corporate franchisor.

The only place there is any collective bargaining for franchisees is in the courts.

Guest, I agree...

My knowledge of franchising is very limited, I have only seen it from the trenches, but have a some idea of the weaknesses, and a some idea of the strengths.  Too much time in the trenches limits the MySpace time, so no, my franchising "opinions" did not come via MySpace, although your contempt and condescension are dually noted.

I also agree that a co-op model would not build "empires" or "take over the world".  However, if properly setup could yield a high percentage of profitable owners.

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Strawhat Info:

"Straw Hat Pizza is totally owned and operated by its cooperative members; its “parent” company is the Straw Hat Cooperative Corporation. Each owner has a real say in his or her company’s future, and the Cooperative was recently awarded the prestigious seal of Fair Franchising by the American Association Franchisees & Dealers (AAFD). Very few other chains have received this honor, and it is a reflection of the pride and satisfaction Straw Hat owners hold in their company. It is a model organization in the industry."  Pasted from <http://www.strawhatpizza.com/history.htm>

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I don't know how this particular Corporation is set up, but, but if I were to do it, I would compared it to - what  a "credit union" is to a "bank".  A credit union is owned by the members and the board of directors manages the administration of the operations.  The BOD answers to the owners.

And since you asked:

The unit owners would collectively own the Franchise.  A board of directors would be established, the brand would be trademarked, licensed and owned by the franchise owners.  Owning a unit would be a prerequisite to be a Co-op member.  Co-op shares would be issued and as the brand grew so would the owner's equity in the franchise.  Shares would be prorated on the amount of the royalties paid.  Each royalty draw would be an investment into the franchise itself.  If the unit is not yet profitable at the local level, the owner would still be building equity in the franchise itself with each fee, each product up-charge and each product "rebate".   A model of cohesion is formed as each unit goes to building the brand and increasing the equity of the owners.  Viability is maintained as expenses are kept to a minimum.

A vesting period would be determined to create stability.  If an owner wanted out, they could cash out the vested amount of shares, take the brand off his site and go independent - protected processes and IP would be terminated, and the former-owner could continue on with his own lease and his own equipment. 

Administrative services such as distribution, logistics, marketing, franchise recruitment, legal services, training, compliance would be contracted out or added to the admin staff and oversight administered by the BOD, and as mentioned above, answering to the owners.

A fixed number of units would be sold each year, with a pre-determined ranking of the best locations as strategically decided on by the co-op board of directors.  Prospective owner profiles would be strict to maintain the cohesion and the "cooperative" portion of the model.  The growth would be slow, but, it would be solid.

A few ideas for the weekend discussions…

-jm