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16 Comments

Name One!

McDonalds visited committee members in Sacramento with an operator in tow to lobby against the bill.

RichardSolomon's picture

People fail to understand what the FTC is all about. They think

it is an effective instrument of government. It has never ever been that. It spends most of its time trying to sort out "policy". Policy is a politically correct word for bullshit.

Courts do not in the main give a tinker's damn what the FTC thinnks about anything. Courts are where things happen. The FTC is where wonks think about how things ought to/might happen.

The cosmetics of the FTC make it look like an authoritative engine of rectification, but the engine almost never gets started. Occasionally the FTC may jump on some small undercapitalized franchise company that can't fight back and just rolls over. That is the easy victory propfile of almost all FTC enforcemnt action. It generates a phony enforcement statistic used mainly to support applications for the following year's budget appropriations.

If the FTC were what most folks think it is franchising would be a lot cleaner. Since franchising really doesn't give a damn about FTC enforcement risk, the FTC is not what most folks think it is. People in the FTC are looking for jobs in companies and law firms when they come out of the FTC. They pander to that future prospect. Look at the former FTC folks working in trade associations (IFA ad others) and law firms (not franchisee focused law firms) and you will see the evidence.

What the FTC thinks about B to B or consumer transaction status means just about nothing.

Franchising isn't a B to B transaction

Not until the franchisor waives the personal guaranty on the franchise agreement.

Granville_Bean's picture

Naive

Guest hopes "Let's hope our guest's confidence is spot on that franchisors will either ignore or even better, support this fair franchising bill ."

While we're at it, let's hope that unicorns start f*arting rainbows. For public relations reasons, franchisors may well not chose to individually come out against it. Rather, they will use their trade associations to argue that the bill is bad for their industry.

Why would a Zor want legal meddling in Zor/Zee relations, if the recent structure favors the Zor? If the bill looks inevetible they will try to get changes, but if it looks defeatable, why wouldn't they go for that? (Your HOPE has very liitle to do with it.)

Law now considers it consumer, you'll have to change it

That's not the law of the land right now. The Federal Trade Commission considers franchise purchases consumer transactions. Besides the federal government so do many states.

Of course, many franchise agreements do not allow business to business relationships. The franchise owner is made to be personally liable in a franchise contract as opposed to the franchisor whose business is liable.

You'll have to change the law and the contracts if you want franchising to be a business to business transaction.

Ray Borradale's picture

And therein lies the problem for franchising and the economy

Richard wrote: "I think the market will equillibrate when franchise investors get smarter due to all the horror stories. But that will take quite a while."  For those who believe that franchising should play an important role in the economy they should heed Richard's words. Logic suggests franchising growth will be damaged if the practices of abuse continue.

To what degree that damage will be is debatable but it will be significant because "franchisees on the refuse heap of predatory franchise practices" will continue to grow in numbers and as influential educators.

Consumer protection for franchisees might not be the ideal approach to circumventing the damage to franchisees and franchising but "continuing to treat franchising as a B to B situation seems like a license to fleece the rubes" so those in the industry fixated on $1 today should start thinking about $10 in the future and stop resisting protection for the industry and they should stop the bullsiht in the short term.

If the vision impaired in the industry continue to make franchising evolution a task similar to pulling teeth from an ass then I'll take any small or big steps in the right direction. California is a big step and the right way to go.

CONSUMER transactions versus biz?

So if a guy who owns a pop stand buys a company car, the lemon laws should not apply, right?

RichardSolomon's picture

As a general proposition I agree that B to B transactions should

not be treated as consumer transactions.

The reasons for this are many, important and commercially critical.

The question of changing that, however, arises out of the circumstances in the franchise industry where there is so much over reaching by franchisors that continuing to treat franchising as a B to B situation seems like a license to fleece the rubes.  While rubes get fleeced in any context as a matter of the nature of stupid people, franchising practices have raised serious political questions about whether special treatment may be the right way to go. Then too this is an election year, which means that raising the specter of tighter regulation of franchising is an excellent fund raising tool for politicians.

In free market open societies there are many avenues open for all sorts of foolishness. I think the market will equillibrate when franchise investors get smarter due to all the horror stories. But that will take quite a while. The franchisees on the refuse heap of predatory franchise practices, however, are creating a bigger stink in an election year.

Will anything really happen? Probably not. The pols will squeeze the suckers, hold hearings and either do nothing or pass something but not appropriate funds for enforcement of wehatever it is that they enact. The result will be about a net of zero in real terms.

Ray Borradale's picture

Support The Bill

I am prone to criticizing, sometimes far worse, our politicains in Australia but the good ones and the really good ones understand community frustration and often times anger at those who do not act in the best interests of the people. But those who do, like Assemblyman Jared Huffman, are deserving of an expectation that the people will get behind them.

Franchisee people power in Australia has forced 3 franchising Inquiries, changes to federal Law, three Bills tabled in Parliaments, one new Parliamentary Act to make franchisors accountable and now all of small business is to be given the same protection as consumers in B2B dealings.

Surely US and particulary Californian franchisees can be expected to get off their butts and support this Bill. Make it happen and enjoy being apart of what is right and what has been resisted aggressively by lobbyists representing those franchisors that abuse the franchisee relationship and contractual power.

Jim Coen's picture

Thanks to Assemblyman Jared Huffman and the CFA

First let me congratulate and thank Assemblyman Huffman and his staff for all their efforts on behalf of franchisees in California. I’d also like to thank Keith Miller, the Chairman of the Coalition of Franchisee Associations (CFA) for his leadership and for using his valuable time as a franchisee, to go to Sacramento on Tuesday to testify on behalf of all franchisees in California and beyond.

Even though Dunkin’ Donuts franchisees have virtually no units in California, we have tremendous interest in Fair Franchising legislation. California will eventually see Dunkin’ Donuts units develop, particularly if the “Level the Playing Field” legislation is passed.  The CFA and the Dunkin’ Donuts Independent Franchise Owners (DDIFO) are supporting similar legislation that is making its way through the Legislature in Massachusetts and Vermont.

DDIFO, the CFA and other Franchisee Associations, along over with 700 additional signers have taken a proactive approach by endorsing the Universal Franchisee Bill of Rights, in addition to supporting Fair Franchising legislation.

There was a hearing at the Massachusetts State House last June that is worthy of every franchisee or prospective franchisee to take a look at. You can find it here: DDIFO: Fair Franchising Hearing in Massachusetts Watch the Video! (scroll down the page a little to get to the video).

The State House hearing video will give you some insight into the emotional aspect of a franchisee that had been preyed upon by a franchisor that used onerous language in the franchise agreement as a blunt instrument against franchisees. In the case of Dunkin’ Donuts franchisee Stan Furash, it certainly did not turn out to be in the best interest of “the brand”? The two units that were doing over $2 Million in sales, eventually went dark!

How does that enhance brand equity?

Many franchisors operate with the understanding that franchisee profitability and happiness, ultimately drives growth, but when all else fails they have the contract clauses on their side and they are able to ultimately get whatever they want, whenever they want it. The bottom line is that franchisees fear for their livelihood and often capitulate to “play along” with the franchisor that holds all the cards.

If the playing field was more level, more franchisees would expand and invest! The entire US would benefit with job creation if franchisees had their basic rights restored. If the playing field is level; franchisees would have incentive to grow, create jobs, the investors including: finance companies, banks, and other investors would also have some protections.  

Once again I want to thank you for the courageous work Assemblyman Huffman and his staff are doing on behalf of franchisees.

Please endorse the Universal Franchisee Bill of Rights

Which Franchisors?

I'd like to know which franchisors are working to defeat this legislation.

That should be disclosed. I as a prospective franchisee would certainly avoid considering those franchise systems.

We know the IFA is against it and they are a franchisor organization.

I'd like to know which franchisors are openly against it!

I support this bill and will

I support this bill and will try and get other people to write letters and call to show our support. I'm no longer in the franchising business but I don't want other people to get ripped-off

Ray Borradale's picture

Of course the IFA

Of course the IFA representing franchisors will be throwing everything at defeating this Bill. People power and only people power can defeat their efforts. IFA will bring in paid for academics, lawyers and put out a call to franchisors to write in or at least complete a template letter against the Bill. But there are a hell of a lot more franchisees on the ground than the IFA can muster and guess who is more believable.

Let's hope you're right, not 1 zor uses their lobbyist to defeat

That would be a very refreshing change. After the International Franchise Association has already come out against the bill, it would be quite a change if franchisors didn'tt use any of their resources to defeat this legislation. In this case for California, they just ignore it.

Let's hope our guest's confidence is spot on that franchisors will either ignore or even better, support this fair franchising bill .

Name One!

Misty,

You stated in your posting: "Franchisors are in the process of using all of their resources to defeat this legislation."

Can you please name those franchisors?