November 5, 2011

The Fight for Fairness in Franchising


"Imagine owning a small business for 20 years, pouring all your time, money and sweat into achieving a decent cash flow and a little equity. Then imagine getting a contract in the mail stipulating that if you want to continue doing business, you must replace thousands of dollars of perfectly good equipment, adjust suppliers or prices or make a dozen other changes that could destroy your bottom line. And if you don't sign, you more or less forfeit your life's work."

Yeah, just Imagine!


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2 comments:

Anonymous said...

Know Your Rights
Here are the major points of the CFA's Universal Franchisee Bill of Rights. For more information, see FranchiseeBillofRights.org.

Freedom of Association
A franchisee may freely associate with other franchisees or associations.

Good Faith and Fair Dealing
A franchisee may rely on a franchisor's good faith, fairness, exercise of due care and performance, including the administration of advertising, rewards programs, marketing funds and franchise or development agreements.

Uniform Application of Brand Standards
Franchisors shall maintain consistent operating standards under a specific franchise system brand name and uniformly apply such standards in a nondiscriminatory manner.

Full Disclosure Regarding Fees Collected from Franchisees
A franchisor shall make available to the franchisee all records of marketing, rewards programs and related fees that have been paid by franchisees, vendors, suppliers and licensees.

Right to Price
A franchisee may establish the price of goods and services it sells.

Fair Sourcing of Goods and Services
A franchisee, or franchisee purchasing cooperative, may purchase from any vendor goods and services that meet the formally established standards of the franchisor.

Right to Renew the Franchise
A franchisee may renew its franchise under terms free of unreasonable costs and/or stipulations.

Right to Transfer
A franchisee shall have a right to transfer its franchise to a qualified purchaser, including, but not limited to, family members or business partners, without unreasonable costs, stipulations or penalties.

Encroachment
A franchisee shall have specific market protection wherein the franchisor shall not materially impact the franchisee's business, or allow another entity with the same or a similar brand to operate.

Ample Notice of Significant Change; Franchisee Termination Rights
Notice of significant change to the franchise system shall be given in a reasonable time prior to required changes. A franchisee may terminate without penalty, or liquidated damages, if a change to the franchise system would cause substantial negative impact or if the franchisee is experiencing substantial financial hardship. Under such termination any noncompetition covenant shall be void.

Default; Franchise Termination Rights
Prior to franchise agreement termination, the franchisee shall be given detailed reasons for alleged default and reasonable time to cure. Termination shall not occur without good cause and shall not compel payments of liquidated damages and/or early termination fees. All franchise agreement rights shall remain in full effect for any franchisee not in default or that cured a default. A default under one franchise agreement shall not constitute a default under a different franchise agreement.

Fairness in Dispute Resolution
A franchisee may elect to have all dispute resolution proceedings and legal action occur in the local venue of the franchisee and shall not be required to submit to mandatory binding arbitration.

Anonymous said...

These only apply to McDonalds if you have enough money to drag on a lawsuit.