LEXINGTON- As spring 2010 comes to a close after an extraordinary recession,
new independent franchisee federations are springing up, while old ones
have either changed or otherwise passed quietly during the dead of winter.
One new umbrella association, the International Association of Franchisees
and Dealers, launched its inaugural conference on May 10. Meanwhile,
one of the industry�s richest trade associations, the Asian American Hotel
Owners Association, is preparing to launch a franchisee federation for
all franchise owners of all sectors, not just hotel owners, and not just
Asian Americans.
These are interesting times for franchisee federations.
Franchise associations can provide members with benefits such as discounted
products for their stores that their franchisors may not supply.
They can provide health care plans for owners and employees that are open
to trade associations but have been closed for decades to franchisors.
They can help provide resources to negotiate contract disagreements, and
organize to provide fair franchise lobbying, something that few franchisors
want. On rare occasions and in the right circumstances, these groups
have even been instrumental in replacing franchisor CEOs and boards.
Jim Coen, president of Dunkin� Donuts Independent Franchise Owners (DDIFO),
a group of franchisees owning 2,500 locations, states, �Independent franchisee
associations are trade associations who act to benefit and enhance their
members.�
Associations are considered by many experts as the best source of information
for a franchise buyer. Yet few buyers take advantage of the opportunity.
Instead, they often speak with franchisees that the franchisor points them
to.
That may be changing. The franchise rule that was permanently
changed in 2008 now requires franchisors to list independent franchisee
associations relating to their brand � if the independent franchisee association
requests that the franchisor put information about them into the
Franchise Disclosure Document. Buyers will now find it easier to
contact these associations�.
There are an estimated 3,500 franchise chains in the United States.
This news journal estimates that currently 7 percent of franchised chains
have independent franchisee associations. Out of that 250 or so existing
groups, BlueMauMau lists nearly 130.
Bob Purvin, retiring chairman and CEO of the American Association of
Franchisees and Dealers (AAFD), points out the innate, but currently largely
latent, power of franchise owners, �Franchisees,� he states, �outnumber
franchisors 300:1. If 10 percent of franchisees (there are altogether
over 900,000) put up $100 a year supporting an association, you would have
a $9 million a year organization. If a significant portion of franchisees
step up to the plate, even nominally, they would be much more influential
and effective.��.
DDIFO�s president thinks that the market for franchisee associations
is limited and that association percentages are low compared to the total
number of franchise systems because only franchise owners who have significant
capital investments tend to have franchisee associations. But he
also stresses that independent associations fill an important function.
�Franchising needs both franchisor and franchisees to mutually share in
the benefits of the relationship. When one party overpowers another
party, that�s when things get skewed. Franchisors need franchisee
associations. Franchisee associations help balance the relationship
to keep a franchise system functioning well.�
Chandrakant �C.K.� Patel, chairman of the Asian American Hotel Owners
Association (AAHOA), thinks there is ample room for many more newcomers.
�The market could support a lot of umbrella franchisee organizations.
Whether they make it or not depends on what the goal of the trade coalition
is and what value they bring to helping franchisees. It is up to
the market to decide which ones effectively address franchisee issues.�
�Independent associations are critical to the health of a franchise,
as opposed to franchise advisory boards, which lack authority and can advise
franchisors on what franchisor leaders and employees are willing to hear,�
says Patel.
Patel thinks that franchisees in every franchise chain should have an
independent franchisee association. He declares, �Franchisee associations
will continue to grow because they are some of the best groups to grapple
with problems affecting the self-interest of franchisees within chains.
And frankly, franchisees see that franchise advisory boards are not as
effective.��
The Asian American Hotel Owners Association, a huge lobbying and trade
group of over 10,000 hotel owners and members, will use its deep pockets
to spread from the hotel industry into all franchise sectors. A federation
of hotel franchisee associations and independent owners, AAHOA is regarded
as a powerhouse among franchise lobbying groups. According to one
recent survey by PKF Hospitality Research, AAHOA members own more than
40 percent of all the nation�s hotels. AAHOA members� estimated holdings
are at $129 billion in property value. The study goes on to say that
AAHOA�s members spend over $32 billion annually on operating expenses.
�These numbers dramatically confirm the significant role that Asian
American hoteliers play both in our industry and in our country�s economy,�
said Tarun S. Patel, AAHOA chairman. �These survey results will be
invaluable as we advocate on behalf of our members with franchisors, legislators,
bankers and others.�
Yesterday in Chicago, during its annual conference, the association
explored, with several restaurant, service and hotel franchisee associations,
how to proceed in launching the new federation. It aims to inspire
excellence in its members through lobbying, industry leadership, professional
development, member benefits and community involvement.
Laura Lee Blake, AAHOA�s in-house survey, says that the purpose of the
new franchisee federation will be to �promote fair franchising for the
benefit of all franchisees in the U.S. and their respective franchise systems
overall.� |