Since 1997 when he spoke at the inaugural symposium of the American Franchisee Association and the annual meeting of the American Association of Franchisees & Dealers, Carmen Caruso has organized and represented numerous independent franchisee associations in both “collective bargaining” efforts as well as litigation or arbitration to redress system wide grievances.

Franchisees seeking to address system-wide grievances as a collective effort, through their association or otherwise, have three options (assuming negotiations have failed)

• Class Actions
• Associations as Plaintiffs
• Selected franchisees as test cases

Each of these options has its own advantages as disadvantages, and we have the experience to guide franchisee leadership into making the most effective choice, and then in executing the game plan and achieving the desired result.

See our Recent Case Highlights and Franchise Cases

Franchisors have historically resisted the formation of independent associations, but the tide toward greater recognition has turned. Significantly, in the recent amendments to its Franchise Rule, the Federal Trade Commission now requires franchisors to disclose whether its franchisees have established an independent association that is free from franchisor control. (16 C.F.R. §436.5(t)(8)). Prospective franchisees can now contact the association for information about the franchise opportunity. This development should provide increased market impetus for the recognition of independent associations.

Also important, eleven states(Illinois, Arkansas, California, Hawaii, Iowa, Michigan, Minnesota, Nebraska, New Jersey, Rhode Island and Washington)have enacted legislation making it unlawful for a franchisor to retaliate against franchisees that participate in independent association activities. These statutes, as well as the common law, offer franchisees significant protection that should dispel any fear on the part of franchisees that have in the past inhibited their willingness to form an association.

Independent Franchisee Associations and their leaders in the Coalition of Franchisee Associations have now published a Universal Franchisee Bill of Rights that can be adapted to any franchise systems.

There is no law that compels a franchisor to deal with the officer of an independent franchise association. In this respect, the attempt to compare franchising to collective bargaining under the federal labor laws is inaccurate. However, numerous associations have achieved the opportunity to bargain with their franchisors in actual practice or service offerings and issues related to the approval of system suppliers, advertising and marketing.

Furthermore, enlightened franchisors should embrace the opportunity to deal with the independent associations that may exist in their systems. The goal is to get a win-win relationship. The alternative of potential litigation or generally unhappy franchisees is not healthy for the bottom line.

Independent franchisee associations are an idea whose time has come.

Class Actions in Franchising: Strategic Considerations in Confronting System-Wide Disputes. Presented to the Coalition of Franchisee Associations. September 2011, Chicago Illinois.

Optimism In The Quest For “Fairness” For Hotel Owners, March 2009 AAHOA LODGING BUSINESS