Franchisee associations: nothing to fear but fear itself, usually: 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 different place today. Most franchise systems would prefer that franchisees participate in the franchise system through a franchisor advisory council rather than through an independent franchisee association. FACs are usually formed by the franchise organization and, in large measure, under the control of the franchisor. FAC meetings are usually called at the convenience of the franchise system. The system sets the meeting agenda, and most importantly, but often overlooked, the minutes of the FAC meetings are drafted by the company, although sometimes vetted by the FAC before publication. The franchise organization typically pays for the expenses of the FAC meeting. An FAC usually does not have independent legal counsel, and by definition, serves only as an advisor to the franchise system. In contrast, an independent franchisee association is typically formed by franchisees, created for the benefit of franchisees, financed by franchisees and controlled by franchisees.

Why Franchisee Associations Were Created

Historically, franchisee associations were formed in times of crisis. For example, changes in management of the franchise organization, the system's bankruptcy or significant changes in the franchise system, as well as a perceived breach in the franchisor's performance of its obligations to franchisees, were all reasons that resulted in the formation of an independent franchisee association in one chain or another. While this may or may not still be the case today, the bottom line is that franchisee associations are much more prevalent on the franchise scene today, and that trend is not likely to reverse. Moreover, although many of the more powerful franchisee associations in today's milieu may have been creatures of controversy, they have managed to find ways to have harmonious relationships with their franchisors--usually.

If a franchise system finds that franchisees have "unionized" (a very offensive word to franchisees, who are typically pro-small business, independent and pro-management in their thinking), the last thing for the company to do is panic. Having to deal with an independent franchisee association is not the end of the world, but it does mean that if the group successfully organizes, the franchise system will be operating in a new environment. It also means that future decisions relating to the franchise system are less likely to be made unilaterally. Even though the franchisees or the association may not have any legal decision-making or, for that matter veto, power, the franchise company must expect decisions made by the system to be reviewed with greater scrutiny and challenged more frequently.