No relationship is perfect, it doesn’t matter whether the relationship is personal, business or institutional there are always going to be both good things and bad things about any relationship. One of the keys to a long and prosperous relationship is balance. Mutual advantage is the key to sustaining the relationship. Relationships prosper when each party derives worthwhile benefits and subsequent returns. Often this requires a give and take.
Complicated institutional relationships such as labor, government, and business like franchising often require independent organization of the parties involved to insure that each stakeholder has the resources to obtain proper representation.
In our government the US Constitution utilizes “checks and balances” to protect US citizens. The key objective for the drafters of the constitution was to ensure that no one branch became too powerful. Each branch “checks” the power of the other branches to make sure that the power is balanced between them, and ultimately the United States is stronger for it.
One of the keys to a successful franchise system is one in which stakeholders share mutually in the rewards and are mutually involved in the process. That way all parties benefit from a stronger brand and share in the success. Franchise systems require checks and balances to ensure the growth of the brand for all stakeholders.
Each party to a franchise has several interests to protect. The franchisor is most involved in securing protection for his trademark, controlling the business concept and securing his know-how. The franchisee often has significant capital and family resources invested in the system.
As a result of the inherent differences between a franchisee and its franchisor with respect to negotiating power, resources and access to information pertinent to the operation of the franchise system, many franchise systems look to independent franchisee associations, advisory boards and supply chain organizations as a means to address these inequities for the inevitable evolution of the franchise system.
Independent Franchisee Associations (IFA) provide franchisees, a needed check to the balance of power in the franchise relationship. By franchisees organizing their own independent trade organization they are acquiring the power and resources, to defend, protect and guard against imbalance in the relationship.
Franchisors may be resistant to the formation of a franchisee association. In some cases, franchisors may refuse to deal with the association or to recognize the association as a representative entity of the franchisees. In other situations, franchisors may be more aggressive in promoting the use of the advisory council in an effort to dispel the belief that another avenue of communication between the franchisor and its franchisees is required. These institutions are fine. The other opportunities franchisees and franchisors have to discuss different scenarios and business cases the better is is for all stakeholders.
As franchising continues to evolve, the power of franchisees, as well as their financial means, continues to grow. In many systems franchisees own multiple units and the franchisor is a corporation with other holdings. This change in the balance of power between franchisors and franchisees makes franchisee participation in an Independent franchisee association, inevitable and vitally important for all parties.
Each franchise system should have an independent franchisee IFA to defend the interests of the franchisees and provide balance in the relationship for long term viability and success of the brand and the entire franchise system.
It’s up to the franchisees to make that happen.
Franchise Perfection specializes in helping independent franchisee associations to organize, gain members and establish an infrastructure that sustain the organization for years to come.
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This article was also posted at Blue Maumau.