“The whole is greater than the sum of its parts.”
You’ve just acquired a franchise and suddenly you are part of a much larger organization. Or are you? Are you one voice among many or are you an integral part of a cohesive, integrated group? How do you make your voice heard? Who do you call with questions? How do others in your organization get things done? Negotiate terms? Get the attention of the franchisor?
The power of numbers
Increasingly, members of a franchise will join forces to form an independent franchisee association. Independent franchisee associations are organizations made up of all or most of a franchise system’s franchisees. Separate and apart from franchisee groups organized by the franchisor, independent franchisee associations are standalone entities created to represent the association’s members on issues that are of import to all of them.
Franchisees may form an independent franchisee association “to speak in one voice” so as to address system-wide issues with the franchisor. In presenting concerns as a unified group, franchisees can work together to resolve disputes with the franchisor on issues that many of them face and that can benefit the system as a whole.
For example: A franchisee is concerned about how the franchisor invests the franchise’s national advertising fund. He or she doesn’t know how other franchisees feel but raises a hand anyway to personally get the franchisor’s attention on the issue, operating essentially as a lone voice in the wilderness. But if the franchise has an independent franchisee association, that franchisee may find others with similar concerns. Speaking in one voice, through their association, members can pool their expenses and resources to address important concerns without having to independently take up the fight.
Leveraging buying power
Independent franchisee associations also offer members the opportunity to leverage group purchasing power. A single franchisee negotiating with a supplier is leveraging the power of one. But team up and negotiate through your association, you are leveraging the power of many.
How does that work? Say your franchisor requires all franchisees buy their point-of-sale system from a particular supplier. Buy one system, and you definitely pay full price. But, form an association to represent and negotiate on behalf of you and 100 members, and the group is significantly more likely to secure a discount with the supplier.
Franchisee Advisory Council v. Independent Franchisee Association
What’s the difference? One is controlled by the franchisor, the other by the franchisees. Both have benefits. But distinguishing between the two can be a bit confusing.
When referring to a “franchisee association,” many are actually referring to a Franchise Advisory Council (FAC) rather than an independent organization. There is an important difference. A FAC is often created and controlled by the franchisor. The franchisor may choose which franchisees will participate in the FAC. Some franchisors may permit franchisees to elect members to the FAC from their ranks. However, the franchisor typically maintains control of the organization.
Independent franchisee associations are…independent of the franchisor. They often are created by a core group of franchisee leaders without any input from the franchisor.
Are associations always adversarial?
No. It’s a common misconception on the part of many franchisors and franchisees that independent franchisee associations are organized only when the members are unhappy and or even seeking to engage in hostile and potentially litigious actions against the franchisor. This is not always the case. Indeed, franchisee associations can also be a vehicle for bringing about amicable and positive change in a franchise system.
Independent franchisee associations are typically formed by a group of franchisees who recognize that there are system-wide issues affecting all or a majority of their system’s franchisees. They understand the benefit to all franchisees if they join forces to form an association. The association, in turn, can address problems in the system on behalf of the entire group.
Like the launch of any business, franchisees organizing an association should consult knowledgeable legal counsel. Beyond forming the association’s legal entity, a franchise attorney can help the group narrow the association’s focus and identify which issues the association will address initially. The attorney representing the association can also advise initial leadership on how best to communicate with other franchisees to grow membership. The leaders and the association’s attorney will work together to prepare for, and engage in, communications with the franchisor.
Teamwork = results for the team
It’s no secret that there is strength in numbers. If you are a franchisee in a franchise with system-wide issues, working with your colleagues can bring change to the system overall. But don’t go it alone. Consider retaining experienced franchise counsel to guide you through the process of effectuating change through your franchisee association. Still got questions? Feel free to email them to me, Julie Lusthaus at [email protected] and let’s talk.