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Posted on Jan 24, 2011

Why a Franchise Association Could Save Your Franchise

Although the Federal Trade Commission (FTC) has rules and regulations in place to protect franchisees and franchisors, there is an additional source that franchisees can go to for support during a conflict with a franchisor. Once someone becomes a franchisee, they will have the opportunity to join a franchisee association.  These associations were created to expand on the limited choices franchisees have had in the past (catapulting to the franchisor’s demands and litigating with them).  Now, instead of litigation or capitulation, franchisees that join an association are linked to an organization that explicitly advocates the franchisee’s position.

One way that franchisee associations work on behalf of their members is by protecting their economic interests.  This is often done by viewing a franchise through the franchisee’s eyes.  For example, once a franchisee joins an association, the association will defer to the franchisee in negotiations of all agreements made between franchisee and franchisor.  So, instead of a franchisee providing two maintenance components for the company (paying for lawn care and window washing), the association might propose that the franchisee only be required to provide one of them (lawn care).  In this way, they are looking out for the best interests of franchisees. When faced with the influence of a large franchisee association, franchisors may be more apt to negotiate new terms in franchise agreements without having to resort to litigation or arbitration.

Directly addressing franchisors isn’t the only means franchisee associations use, they also lobby with federal and state lawmakers about the rules governing franchisor-franchisee relationships, on behalf of franchisees.  An association that has a voice where laws are passed is paramount to defending franchisees.  They can use lobbyists and attorneys specifically employed to get a response to the issues that face franchisees everywhere.  And, having their own lobbyists in place eliminates a one-sided argument and gives voice to the concerns that might not be raised otherwise.  Franchisee associations also use the media to get their agenda known.  Town hall meetings, occasional commercial ads, variously placed volunteers, all of these are avenues that franchisee associations might use to gain the attention of the general public in hopes of spurring action on behalf of franchisees.

There are many franchisee associations spanning the country.  Most have a membership fee, and generally individual franchisees are welcome to join. Some even allow independent associations of franchisees to join under their umbrella franchisee association.

Before committing to a franchisee association, it’s a good idea to get some legal advice.  Franchisee associations are helpful, but what they do (unless their demands eventually become law) is not legally binding.  A franchise lawyer is the safest bet when hammering out the relationship between the business franchise and the franchisees.  Skilled in handling multiple fronts of the franchise industry, these lawyers can create documents that plainly detail what is expected of each side.  They can also update or review existing legal documents and give advice to franchisees and franchisors in future legal matters.  To get a list of the franchise lawyers in your area, search our site by state.  We include franchise lawyers working throughout the country, and will provide you with the names of numerous firms and which city they’re located in.

Article written by Lindsay Hall from MyFranchiseLaw.com. Your source for all things franchise law.

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