Franchisees Meet in Hilton Head

The American Franchisee Association (AFA) will hold its 1999 Franchisee Legal Symposium on Hilton Head Island at the Holiday Inn Oceanfront Resort on May 6-7, 1999. This year’s theme, The Fairway to Franchising, is a double entendre chosen to play up both the Hilton Head area’s reputation as a golf mecca and as a reminder of the bi-partisan legislation introduced in Congress last year to level the playing field between small business franchisees and their corporate parent franchisors.

To help franchisees get “out of the rough” and “onto the green,” topics at the 1999 Franchisee Legal Symposium include: How to Use Class Actions, Association Lawsuits and Other Tools to Accomplish Systemwide Change presented by attorneys Carmen Caruso, Joseph Thomson and Robert Zarco; How Franchisees Can Get Away From Systems that Give Them No Value presented by attorneys Jeffery Haff, Michael Liss and Marc Blumenthal; Protecting Franchisee Interests When The Franchisor Sells Out presented by attorneys Michael Garner and Ken Rutherford, with help from Mike Chiodo, Executive Director of the Domino’s Franchisee Association (DFA); Preparing For the Big Match—Litigation, Arbitration or Mediation presented by FRANCORP Chairman Don Boroian and attorneys Michael Einbinder and Harris Chernow; State Relationship Laws—And What To Do If You’re Not In Iowa presented by attorneys Patrick Carter and Brent Appel and How Franchisees Can Extricate Themselves From Being Forced to Purchase Supplies From Their Franchisor presented by attorneys Chris McElgunn and Shawn Perry.

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Forming a Franchisee Association

Two concurrent plenary sessions focus on forming, managing and growing independent franchisee associations. 1999 Franchisee Legal Symposium Program Chairman and attorney Eric Karp is presenting Forming an Independent Franchisee Association with the help of SUPERCUTS franchisee Jerri Norman and H & R Block franchisee Neil Stafford. Attorney Pete Singler, Jr. is presenting Making Your Franchisee Association More Effective with the help of Tariq Khan, Chairman of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) and Bill Allen, Past Chairman of the Association of Kentucky Fried Chicken Franchisees (AKFCF).

Small Business Legal Smarts author Deborah Jacobs will moderate a special luncheon panel Thursday entitled What Your Lawyer May Not Tell You. Her panelists include Les Stewart, current President of the Canadian Alliance of Franchise Operators (CAFO) (and former Nutrilawn franchisee) and Steve Scheck, former Burger King franchisee.

“Pizza Paper” Unveiled

Research conducted over the past 18 months regarding the similarities between the franchise contracts of the top eight franchised pizza chains in the U.S. will be unveiled by Legal Symposium Program Chair Eric Karp in a session entitled Holding a Gun To Your Head: Marketplace Monopoly—How Pizza Franchisors Play the Game. The eight franchised pizza chains analyzed include Pizza Hut, Domino’s, Little Caesars, Papa John’s, Sbarro, Round Table, Chuck E. Cheese and Godfather’s.

The closing luncheon panel, To Legislate or Not to Legislate—That Is The Question, will be moderated by AFA President Susan P. Kezios. Panelists will include franchisor lawyer David Kaufmann and franchisee lawyer Brent Appel. Five provisions from HR 4841 will be debated, pro and con, by Messrs. Appel and Kaufmann.

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Golf and Tennis

For attendees who would like to experience Hilton Head golf, a tournament is planned for Saturday, May 8 at the Sea Pines Resort. Tennis buffs will also have a chance to play in a tournament on Saturday at the Van Der Meer Tennis Courts.

You can register for the 1999 Franchisee Legal Symposium by phone, fax or by downloading a registration form from the AFA website at www.franchisee.org. Seating is limited. Advance registration is necessary.

Franchisee Leadership Summit

One day prior to the 1999 Franchisee Legal Symposium, on Wednesday, May 5, 1999, the AFA will host its third annual Franchisee Leadership Summit. The Leadership Summit is designed for leaders of independent franchisee associations. Men and women from around the country will arrive in Hilton Head to meet and discuss issues of importance to them and their franchise systems.

The Leadership Summit is co-chaired by Jeff Hearn, H & R Block Franchisee and National Association of Satellite Contract Owners (NASCO) Board Member and Ramesh Surati, Chairman of the Asian American Hotel Owners Association (AAHOA). Franchisees who are officers or directors of their independent associations are invited to sit at the roundtable. The session is a franchisee/AFA member-only session. All observers and participants to the Summit must register in advance.

Check out the AFA website at www.franchisee.org or call the AFA office (312-431-0545) to register.

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Franchisors Becoming More Conciliatory

We’ve been hearing recently that certain franchisors, often those known for their routinely cavalier attitude toward their franchisees, have been taking a more conciliatory tone as of late. The word is that both sides must “work together for the continued good of the brand—so the competition doesn’t eat our lunch.”

A reminder--certain franchisors don’t just decide one morning to be more conciliatory. Case in point—the franchisor trade association (IFA), founded in 1960, didn’t allow franchisees as members until mid-1993--after the formation of the AFA. They didn’t allow franchisees in as members to protect franchisees' best interests—they did it to protect franchisors’ best interests. And they only did it when franchisees aligned themselves as one body under the AFA’s umbrella.

Today’s ‘more conciliatory’ tone of certain franchisors has a lot more to do with the Coble-Conyers legislation introduced last Congress. HR 4841, The Small Business Franchise Act, was introduced in October 1998 with ten Republican and 3 Democratic co-sponsors. There are only five more Republicans in the House than Democrats—and Congressmen Coble and Conyers were able to round up nine of them on five day’s notice to co-sponsor HR 4841.

A franchisee should not be fooled by this new attitude of certain franchisors. While AFA’s members have made significant strides with the introduction of HR 4841, the playing field will not be leveled and the rights of both parties to a franchise contract will not be balanced until The Small Business Franchise Act becomes the law of the land.

Work with your franchisor to improve your brand and to out maneuver your competition. However, realize that your franchisor protects their business interests on Capitol Hill each and every day. It is only prudent that you continue to protect yours by continuing to work with the AFA for the passage of pro-small business legislation like HR 4841.

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Iowa Update

At we get this issue of the AFA Blast Fax to you the word in Iowa is that the Senate passed a measure to modify the Iowa Franchise Act. Franchisor lobbyists want the following changes: transferees to sign a new or then-current agreement upon transfer; a change in ownership among an existing ownership group would provide the franchisor a 60-day notice; the 5% “free bite” in the encroachment provision raised to 6%; and they want to remove the provision saying they won’t discriminate among franchisees on the basis of race, religion, gender (so that they can discriminate on the basis of race, religion, gender…don’t ask us why).

Franchisees inserted their own changes into the Senate version. Franchisees replaced arbitration with mediation; re-inserted the independent sourcing provision; and added a duty of good faith applied specifically to the encroachment provision.

Senate leadership delivered a stern instruction to the House leadership—do not attach amendments; do change this bill in any way. However, the franchisor lobbyists do not want the duty of good faith specifically applied to encroachment. This pro-small business provision was amended out by the House committee.

The new version may go to the House floor for a vote even as we send this Blast Fax to you. But either way franchises win. If the Senate leadership keeps its word and refuses to take up the House’s amendments, the Iowa Franchise Act still stands. And if the Senate allows the amendment through, the Iowa Franchise Act still stands.

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Welcome New Affiliate Member
Christopher McElgunn

Chris McElgunn, partner in the Wichita-based law firm of Klenda, Mitchell, Austerman & Zuercher, L.L.C., joins the AFA as a new Affiliate Member. Chris has considerable experience in franchise law involving a variety of matters, most notably product sourcing restrictions. He is one of the lawyers representing the plaintiff franchisees in the antitrust class action litigation against Little Caesars corporate.

You can meet Chris at the 1999 Franchisee Legal Symposium in Hilton Head or call him at 316-267-0331.

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