Multi-Unit Franchisee Magazine Issue I, 2016 | Page 58

BY EDDY GOLDBERG

Freedomof Associations
IS 2016 THE YEAR OF FRANCHISEE ACTIVISM?

T

he usual reason for forming an independent franchisee association
is to address problems with the
franchisor or other conflicts within the
system. While the goal of the franchisees
who banded together was to improve the
system as they saw it, the relationship
often was adversarial—at least initially,
until the two sides discovered they had
overriding common interests. These internal “family feuds” were the norm for
decades, especially in systems where the
franchisees were not making the return
on their investment they’d expected, for
whatever cause.
In recent years, however, the focus of
franchisee associations has expanded to
include external threats—from competition and the battle for market share, to
what many currently perceive as a threat
to the franchise business model itself from
governmental and regulatory bodies. This
alliance against a common, external “enemy” has driven the two parties closer
together, much as the Japanese threat to
the U.S. auto industry in the 1970s and
1980s drove the United Auto Workers
to view GM, Ford, and Chrysler more
as an ally than an adversary.
From the NLRB’s 2015 stance on
joint employment, to minimum wage
mandates by states and municipalities
and the Fight for $15 from the SEIU,
to the ongoing fallout from the Affordable Care Act, these are tough times for
franchising. Tough times make strange
bedfellows.
Little Caesars
Like most franchisee associations, the Independent Organization of Little Caesars
Franchisees (IOLCF) was formed during a period of adversity for the brand.
“Times were not so good in the mid’90s,” says Todd Messer, who operates 18
Little Caesars in Little Rock. “Franchisees grouped together to see if we could
improve our situation.”
About 30 percent of franchisees in

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the Little Caesars system are IOLCF
members, says Messer, who is seeking
to increase membership in the association. “One way is to provide an economic
benefit to members,” he says. That’s one
reason the IOLCF joined the Coalition
of Franchisee Associations (CFA) about
6 years ago. Specifically, he’s looking at
group purchasing to help franchisees
save on costs and boost unit profitability. After all, no matter what the brand
or industry, “We all use air conditioning,
trash disposal, and alarms,” says Messer,
who is a CFA co-chair and on the organization’s Strategic Planning Committee.
“By working together we’re able to bring
some synergy to create savings and cost
advantages.”
A second reason was to have a greater effect on state and national laws and
regulations that affect franchising by
joining with nearly 20 other franchisee
organizations to make their message
heard by policymakers. “State and local
representatives will listen more intently
to the voice of thousands of franchisees,
instead of hundreds,” he says. This expanded voice means a greater ability to
affect state and national franchise law—
to the benefit of franchisees nationwide.
Since the founding of the IOLCF,
relations with the franchisor have improved significantly as both franchisees
and franchisor have learned to work
together to rejuvenate the brand. Ironically, the success of the association in
helping to turn the brand around may
be one reason many franchisees have
chosen not to join. “The Little Caesars
system has been enjoying a good decade
for franchisees,” says Messer. “Generally these associations are born in times
of adversity. In good times it’s harder to
bring people together.”
Although franchisee-franchisor relations are vastly improved from 20 years
ago, there always are issues, as there are
in all franchise systems. One example,
says Messer, is whenever the franchisor

considers making changes to the franchise agreement. Involving the IOLCF
in advance as those changes are being
considered, rather than as a done deal,
goes a long way to smooth the transition.
As for the future, says Messer, “We are
looking to prosper and grow a successful
franchise business. Let’s work together
to make this as conducive to growth and
prosperity as possible.”
Power in numbers

Misty Chally is executive director of the
Coalition of Franchisee Associations,
whose 18 member associations represent
more than 38,000 franchise owners with
more than 87,000 locations employing
more than 1.4 million people.
“We’re facing constant battles with
the U.S. government and Congress,” says
Chally, with regulations on such critical
items as joint employer, overtime regulations, ambush election rules, and the
Affordable Care Act.
“We’re on the defense a lot in the
states,” she says, “particularly regarding
minimum wage increases—and not only
in states, but in localities, which is tough
to monitor and is how a lot of federal
legislation gets started. Minimum wage
will continue to be a key issue in 2016.”
At the municipal level, New York City
and Seattle have passed legislation forcing franchisees to comply with minimum
wage hikes sooner than non-fra