As a franchisee, it is easy to feel like you are alone on an island. When you run into issues (and particularly issues with your franchisor), knowing where to go for help can be a challenge.
In some franchise systems, one option may be to join a franchisee association. While these associations were once vehemently opposed by franchisors who feared the collective ranks of their franchisees (as is still the case in some troubled franchise systems), today, many franchisors acknowledge franchisee associations, and in some cases they may even turn to these associations for information and guidance. As a result, under the right circumstances, joining a franchisee association can have benefits on numerous levels, and it may make sense for both new and more-experienced franchisees to get involved.
Three Questions to Ask When Considering a Franchisee Association
But, as with most things in the world of franchising, there are two sides to association involvement. So, should you join (or form) a franchisee association? Here are some initial questions to consider:
Q: What type of association are you considering?
There are different types of franchisee associations. There are general associations (which are most common in large franchise systems) that represent the collective interests of their members, and then there are special-purpose associations that organize in response to a particular issue with a franchisor. Since there are only limited protections for franchisee associations under state law (and no specific protections under federal law), franchisees who are considering association membership must be aware that joining a particular cause against their franchisor could come with ramifications against which there are no specific legal protections.
Q: What are your goals in forming or joining an association?
Are you interested in joining a franchisee association in order to gain the benefit of support and insights from your fellow franchisees? Or, are you fed up with your franchisor and seeking to build an association of franchisees who are ready to take legal action? Depending upon your goals, a franchisee association may or may not be your best option. For example, if you are having an issue with your franchisor that is not widespread among other franchisees, you may have better luck developing a strategy to approach your franchisor independently (either informally or through formal legal action).
Q: Does the law in your jurisdiction recognize franchisee associations as stand-alone entities?
In some jurisdictions, franchisee associations can take direct legal action against franchisors. When this is the case, franchisees can often participate in association litigation anonymously and without fear of retribution. However, if franchisee associations do not have legal standing to sue in your state, then your membership in the association may not be something you can hide.
Speak with National Franchise Attorney Jeffrey M. Goldstein
Jeffrey M. Goldstein is a national franchise lawyer with more than 30 years’ experience representing franchisees and franchisee associations. For more information about the benefits and risks associated with joining or forming a franchisee association, call (202) 293-3947 or inquire online to schedule a free consultation.