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Franchisees' Perspective: Leveling the Playing Field

By Susan P. Kezios
October 18, 2004

In 1992 when a group a franchisee leaders sat down with me in Washington, DC to discuss the formation of a national trade association to represent their interests 'which became the American Franchisee Association (AFA) ' the group intended nothing less than to put pressure on the current public policy framework to make things better for franchisees. Included in this framework was the Federal Trade Commission's (FTC) trade regulation rule titled, “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures” (16 CFR Part 436) (“Franchise Rule” or “Rule”). Since that meeting in 1992, the AFA has been the catalyst for ensuring that certain franchisors do not use their enormous contractual discretion with the intent to subjugate or take advantage of their franchisees.

Some of the tools that the AFA has used over the years to level the playing field between franchisor and franchisee include: extensive public relations coverage of some of the most unscrupulous practices of certain franchisors; enlisting the support of hundreds of small-business owners at the 1995 White House Conference on Small Business to put the president and Congress on notice that the issue of franchisee legal rights was a powder keg ready to burst; becoming the primary proponent of the Small Business Franchise Act, which was introduced not once, but twice, by a bipartisan group of lawmakers convinced that baseline standards of conduct at the federal level were necessary in franchising due to the overwhelming imbalance in both the legal and financial power between the parties; testifying before the only two Congressional subcommittees to hold hearings on the FTC's administration of its trade regulation rule regarding the franchisees' viewpoint (American Franchisee Association, Statement of Susan P. Kezios, president, before the U.S. House of Representatives Subcommittee on Transportation and Hazardous Materials, Committee on Energy and Commerce, Aug. 3, 1994. Also, American Franchisee Association, Statement of Susan P. Kezios, president, before the U.S. House of Representatives Subcommittee on Commerce, Trade and Consumer Protection, Committee on Energy and Commerce, June 25, 2002.); convincing lawmakers to ask the General Accounting Office (GAO) for an accounting of the FTC's enforcement of its Franchise Rule; and, finally, at the suggestion of FTC staff in 1995, AFA staff and its members began participating in the process of amending the Franchise Rule.

During the 10 years that FTC staff took to revise the Franchise Rule, AFA pushed as many buttons as possible for the benefit of franchisees by submitting comments when the opportunity afforded itself, sending AFA staff and franchisee members to the FTC's public workshop conferences (in fact, we suggested that FTC staff hold regional public workshop conferences so that the public, ie, franchisees, had ample opportunity to participate) and encouraging franchisee attorneys to communicate with FTC staff. Additionally, the AFA held the first-ever Franchisee Bar-Regulator Meeting, in Chicago in June 1999, at which AFA member attorneys, state regulators, and FTC staff participated.

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