Q: To what extent are franchisee associations valuable?
When used properly, they have been shown to increase franchisees’ profitability significantly and, thus, lead to a healthier franchise system. Regional subgroups, for example, can pool their local marketing expenses for a ‘volume’ effect or additional funds to exhibit at trade shows.
Large franchisee associations can resolve supply-related disputes with the franchisor by creating a purchasing co-operative. This way, franchisees gain control of the costs of purchases, rebates and profits. The franchisor, meanwhile, avoids conflicts while remaining in control of the brand and responsible for setting standards for all products purchased by the co-op.
Franchisee associations can participate with the franchisor in implementing industry best practices and creating new training programs. The associations are well-positioned to inform their members about the importance and positive effects of system changes imposed by the franchisor and, more generally, keep them up-to-date about matters of common interest.
Finally, a franchisee association can create a conflict resolution committee, where any complaints against the franchisor are submitted and investigated. This way, there is a chance to hear both sides of the story and to define a strategic, constructive approach for finding a solution with the franchisor.
Jean-Philippe Turgeon is a partner in the Montreal office of law firm Lavery and heads its franchising and distribution practice. For more information, contact him via e-mail at firstname.lastname@example.org