This year’s 36th annual franchise forum conducted by the American Bar Association took place on October 16-18 in Orlando, Florida where legal professionals gathered to network and discuss the U.S. franchise industry. As one part of the plenaries segment entitled “2013 and Beyond: Trends in Franchising; Where We Have Been and Where We Are Going”, four US attorneys based in Atlanta, Chicago, Los Angeles, and Washington D.C. gathered to share ideas on regulation and franchising.
A post-forum report reveals that no prior discussion between the four took place and no prior agreements regarding what changes they’d like to see in franchising took place (or more specifically, what changes they believe the franchise industry may need to function at its fullest capacity). At its closing, all participants agreed that some degree of regulation is beneficial for franchising as a whole.
Rochelle Spandorf of L.A. offered a five point break down for reform ideas that she believes would benefit franchise industry professionals, both franchisees and franchisors, across the nation. One such idea called for the elimination of variable state laws and the creation of a federal law to make franchising simpler for all parties involved. This change would still warrant the involvement of state level enforcement.
Another point of the plan for reforming the nation’s franchise system involved altering who can franchise. The point called for only those franchisors having operated at least 2 outlets and having been operative for at least the last 2 years to have the right to sell franchise investment opportunities.
Additionally, newer start-up franchisors should be required to offer a representation of projected financial performance for incoming franchisees in the Franchise Disclosure Document that is based on 12 months of company owned activity until franchisee performance data is available.
The five point break down also includes a call for a statutory duty of good faith as part of the federal franchise law as well as a call for a national registry where users would pay to join that would override state registration systems.
Franchise law and franchising are bound together to promote best practice and excellence within the industry across the US as well as abroad. Whether changes like these will ever develop in the US has yet to be decided, though ideas and discussion regarding how regulation may affect franchising and how laws may change franchisee and franchisor relationships are part of what makes for a progressive franchise industry.