Franchisees want to resist changes
June 3, 2009 6:01 PM Subscribe
Franchisee activism question: I am a franchisee of a fairly large painting/home-repair franchise network. The franchisor has put together plans for generating additional income (a new line of business) but in return wants all franchisees to sign a contract addendum that in effect cancels our current exclusive territories.
Currently we (the franchise unit owners) have exclusive rights inside our geographic territories. The proposed new franchise agreement would break this exclusivity and allow the franchisor to either give this new business line to us **or** give it to 'outsiders' on a case by case basis.
I'm not asking for opinions of the pros or cons of the specific deal but I need some help with tackling the biggest issue that has ever arisen in the 10 year life of this franchisee system. The franchisees have no independent organization. We have no 'leader'. No common forum. We each know 10, 20 or 30 other franchisees but nobody knows all 400. As franchisees we have no single direction, voice or strategy.
Now - assume for a moment that the proposed deal is bad for each individual franchisee. Also assume that the franchisor is very clever, wants this is go ahead and will not cooperate with activist franchisees. "Divide and conquer" is a technique that is working very well for them.
How do the handful of active franchisees I know who don't like this deal, organize the others to block the deal going ahead?
If we hire a lawyer (initially just for advice), would that lawyer be willing/able to contact all the 400 franchisees and act as a point of contact/communications channel for the whole group?
Do we need to rush through the formation of some kind of legally created franchisees association? AND then get that body to survey and represent the franchisees ? (remember the franchisor talks to individual franchisees, so this central association would mean nothing to them - I guess they can just ignore it?)
I hear that the franchisor may not legally need 100% sign-up to the contract amendment - that once a certain percentage of the franchisees agree to it, it becomes binding for all - could this be true? What is that tipping point percentage?
Does anyone know of a franchisee help-group or association that we can consult with for advice?
Or recommend a franchising lawyer (in USA: franchisees are in 45 US states) to make contact with?
Thanks for any help (and this is anonymous because the 1000-1500 people familiar with this will id the issue and my user name immediately)
Currently we (the franchise unit owners) have exclusive rights inside our geographic territories. The proposed new franchise agreement would break this exclusivity and allow the franchisor to either give this new business line to us **or** give it to 'outsiders' on a case by case basis.
I'm not asking for opinions of the pros or cons of the specific deal but I need some help with tackling the biggest issue that has ever arisen in the 10 year life of this franchisee system. The franchisees have no independent organization. We have no 'leader'. No common forum. We each know 10, 20 or 30 other franchisees but nobody knows all 400. As franchisees we have no single direction, voice or strategy.
Now - assume for a moment that the proposed deal is bad for each individual franchisee. Also assume that the franchisor is very clever, wants this is go ahead and will not cooperate with activist franchisees. "Divide and conquer" is a technique that is working very well for them.
How do the handful of active franchisees I know who don't like this deal, organize the others to block the deal going ahead?
If we hire a lawyer (initially just for advice), would that lawyer be willing/able to contact all the 400 franchisees and act as a point of contact/communications channel for the whole group?
Do we need to rush through the formation of some kind of legally created franchisees association? AND then get that body to survey and represent the franchisees ? (remember the franchisor talks to individual franchisees, so this central association would mean nothing to them - I guess they can just ignore it?)
I hear that the franchisor may not legally need 100% sign-up to the contract amendment - that once a certain percentage of the franchisees agree to it, it becomes binding for all - could this be true? What is that tipping point percentage?
Does anyone know of a franchisee help-group or association that we can consult with for advice?
Or recommend a franchising lawyer (in USA: franchisees are in 45 US states) to make contact with?
Thanks for any help (and this is anonymous because the 1000-1500 people familiar with this will id the issue and my user name immediately)
If we hire a lawyer (initially just for advice), would that lawyer be willing/able to contact all the 400 franchisees and act as a point of contact/communications channel for the whole group?
This is exactly the sort of problem that top-flight business lawyers live for.
posted by jayder at 8:05 PM on June 3, 2009
This is exactly the sort of problem that top-flight business lawyers live for.
posted by jayder at 8:05 PM on June 3, 2009
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On this point, it usually cannot be true.
Typically you cannot be bound by an agreement between other people. If you have a contract with the franchiser, the fact that some other franchisees sign a new contract should not affect you. Think of it like being that last little house in the middle of a bunch of skyscrapers.
The only time that it could be true is if there is a specific provision in your franchise agreement that allows for something like that. And if there is a specific provision in your agreement like that, there might be a chance that that provision is invalid. Study your franchise agreement, and know your rights under it!
It might be worth it to talk to a lawyer.
That said, if you know 10 franchisees, have them call 10 franchisees, etc. You don't necessarily need to contact all 400; try focusing on the franchises in your immediate territorial vicinity. I think that if you got 50 franchises on board, that would be enough to get the franchiser's attention, and will provide sufficient leverage to renegotiate the crappy new deal.
Fight for your rights!
IANYL
posted by jabberjaw at 7:09 PM on June 3, 2009