Survey of Franchisees Underscores the Want for Honest Franchising


A latest ballot of franchisees – house owners of motels, eating places, retail shops, and different small companies – revealed extremely regarding knowledge concerning the standing of present franchise relationships and the necessity for elevated equity throughout all industries.

The Asian American Lodge House owners Affiliation (AAHOA), which represents the overwhelming majority of all U.S. resort house owners, the American Affiliation of Franchisees and Sellers (AAFD), and the Coalition of Franchisee Associations (CFA), performed the survey after a latest webinar with Federal Commerce Fee (FTC) Chair Lina Khan. As a part of its mission to advertise competitors and defend and educate shoppers, the FTC is soliciting feedback by means of June 8 about points that have an effect on franchisees and their employees.

The survey, which was performed of webinar individuals by AAHOA and the opposite franchisee advocacy teams, underscored the overwhelming help amongst hoteliers, restaurateurs, and different franchise house owners for rules of equity in franchising. Hoteliers backed the rules of AAHOA’s 12 Factors of Honest Franchising to reflect enterprise adjustments and the long-term, mutually beneficial relationship between business franchisors and franchisees.

In keeping with the survey, solely 5% of the franchisee respondents are satisfied that their present franchise agreements present honest phrases representing a balanced relationship between themselves and their franchisor. The survey additional revealed that 72.6% of franchisee respondents would “presumably” or “most likely” terminate their present possession of a franchised enterprise throughout the subsequent yr if they might achieve this with out penalty. Almost two-thirds (64.6%) of all franchisee respondents would probably or very probably increase their enterprise holdings with non-franchised companies if given the chance to get financing with out a franchise. Furthermore, 75.2% of franchisee respondents are both open to or will probably diversify their portfolio of franchised enterprise holdings sooner or later.

“Franchising is in dire straits until adjustments are made,” mentioned AAHOA President & CEO Laura Lee Blake. “Franchising continues to be a robust instrument for financial mobility for America’s small-business house owners, together with AAHOA Members. However franchising solely works when each franchisors and franchisees are dedicated to its success, which requires transparency, equity, and sustainable enterprise practices. As this survey exhibits, there’s a lot room for enchancment relating to relationships that permit our small-business house owners to thrive.”

“Lodge house owners and different franchisees are among the many most inventive, entrepreneurial, and hard-working folks in the US and are actually the spine of native economies,” mentioned AAHOA Chairman Bharat Patel. “Honest franchising isn’t nearly recognizing their dignity or contributions to the communities through which they do enterprise. It’s additionally making a local weather through which the subsequent technology of entrepreneurs can buy or begin a enterprise realizing that the principles aren’t stacked towards them and the place they’ve a good likelihood of succeeding.”

AAHOA leaders have emphasised the necessity for 4 core pillars for resort business franchisees:

  1. Absolutely disclosing the tens of tens of millions of {dollars} in vendor rebates derived from hotelier franchisee purchases, and returning them to the franchisees for the betterment of the system,
  2. Pretty compensating franchisees for all loyalty program discounted gross sales and free reward nights,
  3. Limiting mandated distributors for non-trademarked merchandise to encourage honest pricing and competitors,
  4. Avoiding unilaterally imposed and arbitrary franchise charges with out correct disclosure and approval.

Survey commentators famous help for these pillars, in addition to dissatisfaction with the present state of affairs.

“Franchisors are extra concerned with defending their shareholders than they’re in defending and taking good care of their franchisees who’re their bread and butter,” one survey respondent wrote. “Franchisors proceed to give you income streams on the expense of their franchisees that make their backside line look nice, which, in flip, makes their stockholders completely satisfied.”

Stated one other: “When one begins or buys any enterprise, the purpose is to have the ability to develop it and both promote at a profit or presumably depart it to a relative to handle.

The present franchise system, with enormous switch charges and ridiculous necessities for approval of potential consumers, has made franchises much less of a enterprise alternative and extra of a nightmare. With the unbelievable curiosity in Non-public Fairness Teams changing into Franchisors, the person franchisee doesn’t stand an opportunity of a good relationship.”

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