Franchisee Associations come in all sizes. Franchisees in small-to-medium sized franchise systems can benefit greatly from establishing their own “Franchisee Associations” with fellow franchisees in your system. Hirzel Dreyfuss & Dempsey can help you organize and form your own Franchisee Association to even the playing field and avoid abusive conduct on the part of franchisors.
Story: McDonald's Franchisees Look To Form First National Independent Franchisee Association In Its History
Despite the fact, that franchising giants like Burger King, KFC, 7-Eleven, Dunkin’ Donuts, and Pizza Hut have had to deal with franchisee associations for many years, McDonald’s has never had a national franchisee association. Now, after all these years, things are about to change.
Various media outlets have reported, that 400 McDonald’s franchisees met recently in Tampa, Florida to present and discuss their complaints regarding recent McDonald’s marketing strategies. The franchisees who attended the meeting were reported to account for 25% of U.S. McDonald’s locations.
Over the past few years, McDonald's corporate and it's franchisees have faced a number of challenges ranging from employee wage complaints to the NLRB, however, when it comes to franchisees, their revenue and profitability are top priorities. Despite changes in McDonald's leadership and menu changes, U.S. sales have been weak. With franchisees being required to make a substantial investment in their locations the expectation for increased sales is much higher. To date, many franchisees haven't experienced the increased sales they expected.
The establishment of the Coalition of Franchisee Associations several years ago and its ratification of the Franchisee Bill of Rights could portend more franchisees seeking to organize their own associations. How should franchisers deal with the formation of a franchisee association? Resist, encourage or remain neutral?
There is a representative body of franchisees that the franchiser can deal with.
New products and programs can be presented to the group for feedback and suggestions.
The franchise organization can report potential problems or issues to the franchiser before things get out of control. Problems can be discussed among the franchiser and its franchisees to obtain a solution instead of engaging in conflicts and litigation.
The franchisees may perceive the franchisor to be more willing to engage in fair dealing with franchisees, as they have an opportunity to express their lack of satisfaction with certain aspects of the franchise operation.
Prospective franchisees will see a franchisee association as a positive attribute of the franchise company.
Franchisees who are members of an association may have a greater sense of loyalty and commitment to the franchise organization.
Both parties can speak openly at association meetings and address sensitive topics in a productive way. In many cases, a relationship with added trust can develop among franchiser and franchisee representatives.
As the McDonald’s situation demonstrates, it’s inevitable that franchisees will speak among themselves and share both the good and the bad news. It’s far more effective for franchisers to recognize this fact, and strive to have a productive relationship with their franchise.
By Ed Teixeira