What is a franchisee association?
An independent franchisee association is not unlike a trade union formed by franchisees within a single franchise system. Its purpose is to promote the interest of franchisees through information sharing, as well as collective negotiation with the franchisor and suppliers.
Why form a franchise association?
- The issues an individual franchisee faces are rarely unique – not only when compared to other franchisees in the same system, but to franchisees generally.
- A franchisee association can serve as a vehicle to educate franchisees concerning the state of their franchise system,
- Association is a forum for sharing the benefits of this knowledge through a variety of means, including regular meetings of the membership and/or of the officers of the association, publications and social media communications.
- The often enormous purchasing power that franchisees possess but seldom realise, can be harnessed through soliciting suppliers to become financial supporters of the association and through group purchasing activities by means of cooperatives and other similar methods.
- Franchisees can gain the invaluable benefit of knowing how the franchisor has dealt with a variety of issues in the system, such as transfers and renewals and other opportunities that may not be offered on a system-wide basis.
How to form a franchisee association?
- The starting point for organizing an association is the emergence or identification of actual or perceived needs within a small group of interested franchisees.
- Many franchisees will be concerned about an association’s appearance as being adversarial to the franchisor and the franchise system. To an extent, this is unavoidable and is the necessary initial difficult period.
- We find that initial correspondence from Franchise Legal to the franchisor pointing out that the Franchising Code of Conduct prevents the franchisor from interfering with the association of franchisees, as well as indicating that the intention of the association is not to be adversarial nor to engage in a war with the franchisor, is a good starting point. We try to stress that the purpose is communication with the franchisor and the sharing of information as well as making the whole of the franchise system stronger, for all concerned.
- A letter from the core group should advise fellow franchisees about the formation of the association, tell them what the association can do for them and details the reasons that the association is needed. This letter should indicate that the purpose of the association is to effectively communicate franchisee concerns, on a unified, rather than individual, basis.
- Franchisee organisers should not only forward a letter to non-core member franchisees, but that the core group discuss the association with as many franchisees by telephone or in face-to-face meetings as possible. It is important to have as many franchisees take an interest in the association.
How we can help?
- We have assisted in the formation and management of franchise associations for many years and can advise in relation to all aspects of the association, including:
- Legal entity structure,
- drafting the rules of the association
- Creating a management structure
- corresponding with the franchisor, and
- Providing ongoing advice to the association in relation to common matters of concern to the franchise group
- The group nature of the association often allows the provision of the legal services to be at a very accessible price to the members.