Under the right circumstances, forming a franchisee association can be a highly effective way for franchisees to get their franchisor’s attention and generate bargaining power that they can use in negotiations. Here, franchisee lawyer Jeffrey M. Goldstein discusses some important considerations for forming a franchisee association:
Why Form a Franchisee Association?
The main reason to form a franchisee association is to establish leverage for achieving a common goal. This could be anything from seeking modifications to system standards or supplier restrictions to taking a stand against abusive franchise practices. The key to benefitting from a franchisee association is to share a unified voice. If each franchisee in the association has a different agenda, the association will not be able to stand behind a consistent message, and this will stifle its effectiveness.
When is the Right Time to Form a Franchisee Association?
When forming a franchisee association, timing can be important. While it can make sense to proactively form an association “just in case” in some circumstances, in others it can be more impactful for franchisees to associate when faced with a specific (and widely-shared) concern. On the other hand, if franchisees wait too long to form an association, the situation could deteriorate further, and this could make it more difficult to achieve a favorable resolution.
Given these considerations, when thinking about forming an association, franchisees should engage legal counsel before raising any concerns with their franchisor. A franchisee lawyer can advise prospective members with regard to whether and when to form an association—as well as how best to structure and put forth the association’s demands. If the timing isn’t right to form an association, other options may be available, and a franchisee lawyer can advise prospective members of these options as well.
How Do Franchisees Form an Association?
A recent Franchise Times article discusses three key attributes of a successful franchisee association. The article identifies these attributes as:
- A reason to come together;
- Resources; and,
- Communication.
This is a pretty good (if high-level) list, and it touches on some of the most-important practicalities of forming an association. As discussed above, a unified message (or reason to come together) is extremely important, and communication between members and the association’s legal counsel is key. With regard to resources, the article suggests that having a legal fund can provide franchisee associations with additional leverage, as it shows the franchisor that the association is willing and able to go to court if necessary. Ultimately, however, the most important step is simply to get started, and this means scheduling a free initial consultation with an experienced franchisee lawyer.
Schedule a Free Consultation with Franchisee Lawyer Jeffrey M. Goldstein
Do you have questions about forming a franchisee association? If so, national franchisee lawyer Jeffrey M. Goldstein can help. Mr. Goldstein has well over 30 years of experience representing individual franchisees and franchisee associations nationwide. To schedule a confidential consultation, please call 202-293-3947 or request an appointment online today.
