Steps to Improving the Franchisee - Franchisor Relationship
What makes a relationship between two parties good? What makes a marriage last for 50 years or “until death do you part?” While the answer might be philosophical or studied for years, it boils down to two words: culture and commitment. The culture has to fit both parties, and both parties have to be committed to common goals. In fact, both parties must accept their role in the relationship. Especially in the relationship between franchise system and franchisee, both have to want it. Making the franchise relationship a good one requires the right culture, the commitment of the franchise company, and the commitment of the franchisee, with the ability to tweak the commitment from time to time. READ MORE
Franchisee Associations - Nothing to Fear
With the right attitude from both sides, a franchisee association can be an effective instrument in providing a better future for a franchise system.
Twenty-five years ago, “franchisee associations” was an unpopular phrase. This phrase put fear into the minds of franchisors. A franchisee association was tantamount to unionism. It signified a breakdown of the working relationship between the franchise system and franchisees and a vote of no confidence. The association was generally hostile to the franchise system in both word and deed.
The world is a different place today. READ MORE
Divergent Interests Drive Different Metrics for Success
To appreciate the need for a level playing field, it is important to understand why franchisors take positions that are at odds with their franchisees. It is basically because a franchisor’s business interests tend to differ from the interests of its franchisees – or at least many franchisors perceive that they do. In particular, the main goal of a franchisor – to maximize its profits – can sometimes be achieved at the expense of its franchisees. This happens when the franchisor raises fees in its royalty structure, increases the wholesale costs of its required proprietary goods, or places a second franchisee within an
existing franchisee’s territory. These situations can significantly reduce individual franchisee’s profit margins, but increase the royalties, profits and franchise fees received by the franchisor.
Franchisors’ strategies which reduce franchisees’ income are often rather shortsighted. Together, the franchisor and franchisees are generally better served by a long-term plan that maximizes profits for both. A business plan that benefits the system as a whole is almost always a better strategy than one that simply provides a short-term
profit for the franchisor. Unfortunately, franchisors are not always far-sighted enough to follow this model. This is especially true when the franchisor is looking to sell, has recently purchased the system, or is trying to attract investors. Thus, Franchisees are often faced with a franchisor trying to maximize its profits at their expense.
A Total Quality Franchising approach is designed to address the interests and needs of franchisees and franchisor.
American Association of Franchisees & Dealers
The AAFD is organized by the formation of exclusive Trademark Chapters representing all of the franchised systems for which we have a significant number of members. The Association’s Trademark Chapters provide a crucial service of helping franchise systems throughout the United States develop consensus decisions within their franchise systems and to promote more equitable franchise relationships which exhibit the AAFD’s goal of Total Quality Franchising!
Franchisee Association Legal Counsel
Dady & Gardner, P.A., limits its practice to helping franchisees and dealers preserve and enhance the value of their businesses as effectively and as efficiently as possible. The firm of franchise lawyers practices nationwide and delivers the highest quality representation available. Dady & Gardner’s franchise attorneys have represented a wide array of clients, from quick-service restaurant franchisees to farm and industrial equipment distributors, and have successfully resolved disputes against more than 350 different franchise and supply systems.
When You've Bought a Franchise, but the Numbers Don't Add Up: A committed franchisor can help.... or not
"A partner and I invested in a franchise last year. The franchise offers a variety of healthy foods, but focuses primarily on soups and salads.
We were offered a number of territories, but chose a large downtown area in an upscale Midwestern city.
The problem has been finding the right location for the first restaurant. We have found a potential site, but the rent is extremely high and the landlord won't budge. We have 'run the numbers,' and the bottom line is that we will have to sell about 250 soups and salads every day just to cover the rent. My partner and I are not comfortable we will be able to achieve that sales volume anytime soon, especially in the current down economy. READ MORE