That’s the situation the Coalition of Franchisee Associations (CFA) says veteran franchisees are increasingly facing as their agreements come up for renewal. And that’s the climate new franchisees are entering when they sign into systems where the power and control have shifted dramatically to the corporate side.everyone together to stand up for important considerations is a positive move in unifying franchisees.”

“Over the last 30 years, franchise agreements have become more onerous and one-sided,” says Jim Coen, vice chairman of the CFA and president of Dunkin’ Donuts Independent Franchise Owners. “They say nobody puts a gun to a franchisee’s head to sign these contracts, but that contract is a loaded gun. The flip side is, if you walk away or walk out, the franchise agreement makes it hard to harvest the equity you’ve built up in your business. Some of these agreements are pretty much intolerable.”

Read More at: Entrepreneur Magazine

The coffee is hot and the stools at the counter are familiar, but after 50 years as a George Webb restaurant, this café at 7510 W. Layton Ave. in Greenfield has bolted from the venerable Milwaukee brand. Other locations are following suit.

Doris Hajewski of the Milwaukee Journal Sentinel  reports that the George Webb restaurant chain is a little smaller, with the loss of eight locations run by operators who didn’t like terms offered by the new owner.

Six Milwaukee-area George Webb restaurants will start operating Thursday as Griddlers Cafe. They are at 10706 W. Greenfield Ave., West Allis; 4160 W. Loomis Road and 7510 W. Layton Ave., Greenfield; 2012 W. Layton Ave., Milwaukee; 211 N. Chicago Ave., South Milwaukee; and N88-W16747 Appleton Ave., Menomonee Falls.

Don Hensiak, who with his brother Robb has been a 20-year franchise owner, owns five of the locations. Diane Neavins owns the Menomonee Falls location and will operate as a Griddlers Cafe under a franchise agreement with Hensiak.

“We had a decision,” Don Hensiak said. “Do I go independent or sign a 10-year agreement with someone I didn’t know very well?”

In addition to the Hensiaks and Neavins, franchise operators in Appleton and Burlington decided to leave the Webb franchise system.

Webb will have 29 locations, including eight corporately owned, after those departures, said Webb vice-president Ryan Stamm. Webb had 40 locations, nine corporately owned, as recently as 2008.

The defections are the latest in a series of challenges for the longtime burger haven.

Stamm’s father, Dave, bought Webb from the founding family in 1985. In 2005, he sold it to Jayne Aliota, who was a manager at the Webb headquarters.

After several years of financial turmoil and lawsuits involving Aliota, the ownership of George Webb passed to M&I Bank, which held a loan that financed the business. A year ago, Philip Anderson, who also was a lender to Aliota, bought the Webb assets from M&I.

Anderson ousted Aliota in 2007.

This year, under Anderson’s ownership, Webb’s asked franchise operators to sign new agreements.

“We had to make sure we had a franchise agreement uniform with the brand,” Stamm said.

The new agreement calls for higher franchise fees and requires standardized menu items at all locations, Stamm said. The new agreement is more of a typical food industry franchise deal than what Webb operators had in the past, he said.

Read more at Milwaukee Journal Sentinel

The document aims to spell out those rights and expectations of both parties as a beginning point of franchise discussion.

“Over the years franchise agreements have become more and more draconian, and this needs to change,” says Jim Coen, co-chairman of the CFA Fair Franchising Committee. “For franchising to truly reach its potential, franchisees must have protection so they can earn, harvest and perpetuate the equity they have worked so hard to develop. The Universal Franchisee Bill of Rights sets a foundation for fairness.”

The Universal Franchisee Bill of Rights is a basis to protect against infringement of franchisee rights. This document brings to light the imbalance in many franchise agreements and problems prospective franchisees should be aware of before they sign an agreement. Voted on by elected delegates from Subway, Burger King, Hardees, hotel owners, Meineke, Supercuts and other franchisee groups, the document contains crucial components: freedom of association, good faith and fair dealing, uniform application of brand standards, full disclosure regarding fees collected from franchisees, right to price, fair sourcing of goods and services, right to renew the franchise, right to transfer, encroachment, ample notice of significant change; termination rights; and fairness in dispute resolution. Many association representatives and individuals close to franchising have contributed to the ideas and language of the Universal Franchisee Bill of Rights.

“Any franchise agreement requires a delicate balance of good faith, fair dealing, and power used responsibly,” said ChandraKant “C.K.” Patel, chairman of the Asian American Hotel Owners Association (AAHOA), an organization that represents over 50 percent of the economy hotel owners in the United States. AAHOA has spearheaded the movement for a Universal Franchisee Bill of Rights across multiple industries for the past seven years.

“For the franchisor-franchisee relationship to thrive, the franchisor must live up to certain principles and the franchisee must follow certain guidelines – and this document carefully outlines how the unique franchise partnership can best succeed for mutual benefit.” 

The effort to make a franchisee fairness doctrine has been ongoing for many years, and the CFA created the Fair Franchising Committee to specifically address the needs and rights of franchisees. The committee has spent much time discerning the necessary actions needed to create the Universal Franchisee Bill of Rights. Documents from other organizations, such as the Asian American Hotel Owners Association, the American Association of Franchisees and Dealers and the American Franchisee Association were analyzed and used as inspiration for this new Universal Franchisee Bill of Rights.

The Universal Franchisee Bill of Rights will be officially released on June 22 at the CFA Day Forum held at the Gaylord National Resort and Convention Center in National Harbor, Md. Franchisee associations and individuals will have the opportunity to endorse the Universal Franchisee Bill of Rights at franchiseebillofrights.org once it is officially released at the CFA Day Forum.

CFA discusses the Universal Franchisee Bill of Rights

Don Sniegowski of BlueMauMau reports that there is a seismic shift under way in how franchisees approach balance in franchisee/franchisor relationships. It is a multi-pronged strategy headed by the three-year-old Coalition of Franchisee Associations (CFA) that utilizes market forces, collective bargaining and possible legislation.

The start of the shift took place just last month in a dimly lit conference room. Franchisee leaders from some of the country’s most recognized brand names convened in one of the many rooms at Marriott’s Orlando World Conference Center to hammer out a universal bill of rights draft for franchisees.

It may have a profound effect down the road.

America’s franchisees currently face sizable problems. They struggle for the freedom to associate with other owner-operators in independent franchisee associations. Members fear termination or retaliation by a franchisor for hanging out with the wrong crowd. Store owners want territorial protection against a competing company store or a franchise opening next door, causing lost business and turning his store unprofitable. Franchisees also want audited disclosures on vendor kickbacks. Kickbacks from a vendor to a franchisor can significantly raise the price of goods to franchisees, and they are typically undisclosed. They act as a hidden royalty fee. These are a few protections out of 13 in a bill of rights that has been drafted for restaurateurs, hoteliers, convenience store operators, quick printing owners and all manner of franchisees, no matter what the industry.

“The bill of rights was a huge step forward for us,” declares Dave Glodowski of the vote in support of the bill at the Orlando meeting. As chairman of the Coalition of Franchisee Associations and himself a multi-unit owner of Hardee’s quick service restaurants in Minnesota, Glodowski says that the franchisee coalition has been gaining traction. The CFA already represents store owners in such giant chains as Subway, Burger King, Hardee’s, Meineke Car Care, Supercuts, Dunkin’ Donuts and others. Last year the Little Caesars franchisee association joined. This year the giant Asian American Hotel Owners Association signed on.

Read More at: BlueMauMau

Throughout the course of Swartz’s career of more than 47 years in franchising, he has done work or lived in more than 45 countries, including the U.S., Canada, and the U.K. He has been the president of six different firms and a senior executive at four more, including prominent franchisors such as Dunkin’ Donuts, Snelling & Snelling, ADECCO (Adia Services), Dunhill Personnel, Postal Instant Press (PIP Printing), Chicken Delight and a division of ITT.

During his tenure at Dunkin’ Donuts, Swartz worked closely with William Rosenberg, who founded the Dunkin’ Donuts concept in 1950, and who also co-founded the IFA in 1960.

Swartz, a Boston native and graduate of Northeastern University, has provided franchise consulting services to dozens of Fortune 2000 businesses, as well as to hundreds of smaller franchisors. He is a CPA and a Certified Franchise Executive, and is a noted authority on franchising, both in the U.S. and internationally.

Swartz has authored numerous articles on both international franchising and franchising in general. His specialty at the iFranchise Group, a Chicago-based franchise consulting firm, is in strategic planning and international development.

The William Rosenberg Distinguished Service Award was established by the IFA Foundation through a donation from the Rosenberg Family Foundation. The award, presented annually at the IFA Annual Convention, is granted to a single individual who has made significant contributions to franchise education, through research, teaching, fund raising, or other activities or service.  around the world.”

 QSR Web

He writes,

2011, a buyer’s market. Transactional franchisee attorneys tell me that they’ve never seen an environment like this, where so many fees and agreements are up for negotiation.

And,

The good news is that franchisee associations will see an uptick in 2011. Franchisee attorney Andy Selden, who is a leader in forming independent franchisee associations and national cooperatives, told me that he is seeing an increase in the creation of these organizations.

Read more at: CNBC

Watch the slide show: Top Dos and Don’ts of Buying a Franchise

Slide 6 is an interesting one: 

Independent Franchisee Organizations

CNBC looks at well-known franchises like Five Guys, Dunkin’ Donuts, Cold Stone Creamery, and why Procter & Gamble–the world’s largest consumer-products company–is dipping its toes into the franchising waters of two competitive service industries–dry cleaning and car washes–putting the well-respected reputation of Tide and Mr. Clean on the line. 

The documentary also examines the dark side of the franchising business showing how the American Dream can very quickly become a nightmare. Rovell tells the cautionary tale of Camp Bow Wow, a franchise built around America’s love affair with its pets and reveals some of the potential pit falls of the franchising industry.  Rovell also uncovers how a well-known franchise like Cold Stone Creamery may not be what it seems. With little protection or support from the Federal Trade Commission along with hidden expenses, steep nonrefundable franchise fees and more, even some of the most successful franchisees can’t get out of the red. Rovell speaks with Don Sniegowski of Blue MauMau, the foremost franchise journalist in the country, who says that many franchise buyers don’t realize that when they buy into the business they can lose more than their initial investment.

Whether it’s started by the internationally renowned franchisor or the ma-and-pa franchisee, litigation stands an unwelcome event in a relationship desperately needing trust, respect, and the singular, shared aim of bottom-line success. Over the last decade, however, a litany of franchisor-franchisee disputes have made their way into the courtroom, proving to be a time- and cost-consuming process littered with stress and frustration for both sides.

While at first glance the franchisee-franchisor relationship might appear to be a creature of contract, wherein the franchisor can exert control with its unilateral rights to govern, reality has painted a different portrait far more based in the colors of collaboration and responsiveness. Successful franchise relationships result from transparency and honesty running through all phases of the relationship—often well beyond any contractual stipulations—and, furthermore, a shared recognition that each needs the other to achieve productive results.

“The franchisor-franchisee relationship [is] really a complex partnership of balanced mutual dependence,” says Florida attorney R. Alan Higbee, a noted expert on franchise matters. “The key to most franchisor-franchisee relationships, like most partnership relationships, is trust and communication.”

From some of this decade’s most notable court cases, important lessons can be gleaned that highlight and emphasize the importance of finding a sincere and honest middle ground that keeps the ultimate focus on food, customers, and profitability.

“At the end of the day, the common lesson learned from all of the disputes … is that franchisors need to find a way to maintain a level of trust and communication with their franchisees that prevents major disputes from arising in the first place,” Higbee says.

A Lesson Learned:

“Franchisors desiring to make changes to their systems by asking their franchisees to make significant additional capital expenditures are best served by answering the ‘why are these expenditures necessary and appropriate’ question of their franchisees. Not with a ‘because we can’ response, but rather with a ‘because this investment will likely give you a reasonable return on your investment’ response backed up with the results of successful testing of the proposed capital expenditures at the store level. Absent that testing and successful ROI experience, franchisors should make the business decision to not try and impose such capital expenditures on their franchisees, even if their lawyers advise them they have the legal right to do so.”

Minneapolis-based attorney J. Michael Dady, a franchise law specialist

The in depth article takes a look at these 5 celebrated cases: Quiznos – Misrepresenting ‘Material Facts’;  The Dairy Queen Case: The Necessity of Modernization?;  The Burger King Case: Dictating Franchisee Lift;  The Little Caesars Case: Protecting the Brand’s Long-Term Health; Noble Roman’s Pizza & Raving Brands: Feeling Duped; The Green Burrito Case:  Kickbacks and Competition