Business Management Case Study; Franchising Companies and Unions or Franchisee Associations

Business Management Case Study; Franchising Companies and Unions or Franchisee Associations

Many people may not realize that in franchising companies the franchisees often act like unions. The franchisees will form franchisee associations, with then the franchising organization. In some ways this is good because they can talk over amongst themselves all kinds of issues they have with their businesses and help each other out. It makes sense the franchisees are part of the team and they are on the ground floor and have the best ideas to make the franchised outlets more successful.

Nevertheless, sometimes these franchisee rights groups or unions form in order to bully the franchisor. Further, if they do not get their way many of them are backed by larger groups of franchise rights organizations or associations, which also have members, which are franchisee associations from other companies. The most unfortunate thing of all is that the larger franchisee rights Association groups are generally made up of class-action lawyers.

I remember once, I attended an annual meeting for The American Association of Franchisees and Dealers, which was meeting down the street in IL from Hamburger University the AAFD met there. I remember overhearing conversations with disgruntled franchisees, who had met in the bar with Franchisee Lawyers, who had come to find cases at the hotel where the seminar was.

Absolutely unbelievable, this is an ugly business from the adhoc Franchisee Associations within franchising companies (Unions) to the occasional franchising founder who conveniently lives on a ship off the coast so you cannot serve him a lawsuit? The world of franchising is an interesting place and franchising companies need to be aware of the unseen legal side and Tiger traps, which await. Please consider this a 2006.