We don’t need to look further than money to understand the conflict between franchiSEES and franchiSORS or the International Franchise Associations’ incentives for lobbying against Senator Cortez Masto’s new bill.
Again, if you’re new to this conflict, franchiSEES are the owners of the local shops and restaurants you love and visit every day. They are the franchise industry’s primary investors. They put time and money into the franchise concepts that allow you to get your hot cinnamon rolLs and enjoy mosquito-free living.
In order to purchase rights to open a franchise location in your town, the franchiSORS (the owners of the brands) require the franchiSEES to sign contracts with dangerous ALL CAPS statements that take away franchiSEES’ basic rights. When a franchise agreement is signed, a franchiSEE pays the franchiSOR a hefty franchise fee that can range from around $10,000 to hundreds of thousands of dollars.
FranchiSEES are even required to sign personal guarantees, meaning that if something goes belly-up in their franchised business, the franchiSOR has the right to go after their home!
These contracts are customary in the franchise industry and their danger is poo-pood during franchise sales. Franchise industry experts commonly make claims like “the ALL CAPS clauses are only in the contract in case a franachSOR needs to deal with a ‘problem’ franchiSEE,” and “everyone who buys a franchise has to sign a personal guarantee…. that’s just the way the industry works.”
Right now, the local franchiSEE owners of the stores you know and love are standing together against franshiSORS. Senator Cortez Masto of Nevada introduced a bill on July 31st that could be the first of many steps towards reforming the industry.
But the International Franchise Association (IFA) is lobbying against the very basic changes the franchiSEES are requesting.
All we need to do to understand the IFA’s resistance to the bill and the franchiSEES push for reform is to follow the money.
On their website, the IFA directs potential new franchiSEE investors to over 1400 franchise opportunities.
If you’ve spent years working hard for someone else and you’ve finally got enough money to invest in your own business, the IFA is there to offer your the resources you need to take that plunge. In fact, you can even buy a franchise that matches your “passion.”
There’s a lot of money to be made in franchise sales and the IFA’s job is to create an environment conducive to getting new investors to buy. For the IFA, it’s sell, sell, sell. FranchiSORS can affiliate with the IFA as dues-paying members and member franchiSORS’ franchise opportunities are listed on the IFA website for potential new investors to find.
The IFA collects event sponsorship and trade show fees from franchiSORS and makes their money when franchiSEES are investing.
Senator Cortez Masto’s bill would protect franchiSEE investors by taking a first step towards ending illegitimate franchiSOR expansion and fraudulent franchise sales.
The IFA is not incentivized to support legislation that would promote transparency, prevent fraud, protect the taxpayer, protect investors, slow down franchise sales and possibly even protect the economy.
Why not? Because they want to protect their own money instead.
It’s simple, really.