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Why Form an Independent Franchisee Association?

Forming a franchisee association is probably the most important single step that franchisees can take to enhance their prospects for success in a franchised business. 

A “franchisee association” is an independent organization of franchisees. It is distinguished from advisory councils or other entities sponsored or funded by the franchisor.  Some associations have been funded by the franchisor, but the resulting inhibition of independent action on behalf of franchisee interests makes such organizations at best a hybrid, and at worst completely compromised in their ability to represent franchisee interests. 

A franchisee association is the most effective means of advancing the shared interests of members of a franchise system. It is not necessarily the case that all members of a franchisee community share any particular interest in common. Nevertheless, in most cases, most, if not all, franchisees in a chain will find some interests that they share in common and that most of those lend themselves quite well to collective action by member franchisees. 

A basic factor to keep in mind is that the business interests of franchisees often differ substantially from the business interests of their franchisors.  Thus, in even the best of circumstances each party, because it is in a different business, is pursuing different goals, using different strategies and operating from different perspectives.

Protecting Franchisee Interests 

Against a background of spotty and extremely limited legal protection for franchisees’ interests, a franchisee association can have extraordinarily beneficial effects not only on protecting the interests of the franchisee but also on the franchise relationship itself, and make the process of franchising work much better for both sides. 

The franchisee association has the effect of balancing power in the franchise relationship. Carefully targeted collective action by franchisees often produces results that individual franchisees are incapable of obtaining by or for themselves. 

Recognition by the Franchisor? 

Formal recognition by the franchisor and formal communication with the franchisor are emphatically not necessary to the success of an independent franchisee association. A great deal of communication can occur between the franchisee community through its association and the franchisor without such formal recognition or formal communication channels. 

Whether or not the franchisor has the confidence and wisdom to deal formally and directly with an independent association, the intelligent management of an independent association can indeed bring about win-win outcomes in the system. 

The preceeding excerpts were taken from an article written for the AFA by Andrew C. Selden, Briggs and Morgan, P.A., Minneapolis, MN. (612-334-8485)

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Forming an Independent Franchisee Association:
A Turn-Key Approach

Authored by

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Table of Contents

I.    INTRODUCTION

II.   BACKGROUND  

     A.    WHAT is an Independent Franchisee Association? 
     B.    WHY Form an Independent Franchisee Association?

i.    No One Franchisee Is As Strong As All Franchisees Together  

ii.   Education  

iii.  Communication  

iv.   Public Relations  

v.    Purchasing Power 

vi.   Legislative Activities 

vii.  Clearinghouse of Shared Interests 

 III.  GETTING STARTED  

      A.    HOW To Form A Franchisee Association  
      B.    WHO Forms the Franchisee Association?  
      C.    Communication  
      D.    Strategic Planning Session 
      E.    Set Up the Organizational Meeting  
      F.    The Meeting  
      G.    Post-Meeting Action    

IV.   LEGAL ISSUES  

      A.    Statutory Freedom of Association 
      B     What’s in a Name? 
      C.    A Vessel for the Association  
      D.    The By-Laws of the Association  
      E.    Qualification for Membership  
      F.    Voting Rights and Dues  
      G.    The Board of Directors  
      H.    Officers 
      I.     Taxation of the Association 
      J.     Lawful Activities 
      K.   Standing of the Association to Sue or Be Sued 
      L.    Insurance   

V.    CONCLUSION   

APPENDICES

Appendix A - Sample “Fellow Franchisees” Letter From Association Leadership
Appendix B – Sample Memorandum of Understanding
Appendix C – Strategic Planning Session Agenda  
Appendix D – Sample Membership Form 
Appendix E – Sample Purposes Clause 
Appendix F – Sample Post Meeting Letter to Franchisees 
Appendix G - Sample Letter from Association Leadership to Franchisor; Sample Letter to General Counsel of Franchisor 
Appendix H – Sample Press Release
Appendix I - State Freedom of Association Laws
Appendix J - Summary of Cases Involving Franchisor; Actions Against Franchisee Associations
Appendix K - By-Laws, Independent Association of Jackson Hewitt Franchisees, Inc.
Appendix L- By- Laws, Independent Association of MBE Franchisees, Inc.
Appendix M - Organization Decision Agenda

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