Attorney Richard Solomon

From time to time DDIFO is pleased to present Guest Commentary from valued contributors. Guest commentaries feature the views and opinions of the contributor and are not necessarily the opinions of DDIFO and it’s Board of Directors. The following is an article written and submitted by Richard Solomon titled Freedom is Not Free! Attorney Richard Solomon, 11502 Overbrook, Houston, TX 77077, 281-584-0519, Email: franchiseremedies@sbcglobal.net website: www.franchiseremedies.com

Most people believe that franchisees need a collective voice competently expressing franchisee needs to a “reasonable” franchisor. Why that is a mistake in many instances is that the abusive franchisor isn’t interested in being reasonable, believing that the terms of his franchise agreement relieve him of any such obligation; what the franchisees want would  reduce revenue from the relationship; and that once the franchisees sign contracts that provide for franchisor top down configuration of the business model, they are not required to “let the inmates run the  asylum”.

If franchisee existence for those folks is to become rationalized,  leadership won’t be parlor trained, church manners, play by the rules as they are written, ladies and gentlemen. There is no entitlement. You have to make it happen.

Leadership to rationalize the existence of franchisees who bought bad deals from abusive franchisors is different from leadership in a good business model run by a franchisor with a long view to the future viability of the system.

Tough guy punk franchisors who couldn’t care less if their franchisees go on line and call them bad names – at least not enough to change anything – must be dealt with differently. These guys are in it for present tense interests only.

People who play “by the rules” espouse irrelevant notions like franchise fairness. No tough franchisor will ever give a damn about franchise fairness, and franchisees lack the resources to enthuse any government agency to come to their rescue. If it were otherwise, life would be better for these victims. This isn’t a recent phenomenon.

Effective leadership of franchisee groups in this situation has to be able to change the rules – to stretch them so far that they are not even recognizable anymore – without actually violating any of them.

Much of what franchisees believe is “wrong” is actually not wrong at all. Many franchisee notions of what should and should not be are simply misplaced. Examples of these notions include the basis for determining when a franchisor must approve a franchise resale. The reality is that a franchisor can blow up a resale opportunity with virtual impunity under the terms of the contract. Between the franchisor’s arbitrary right to refuse consent to any resale, and his ability to change the rules of engagement with every new agreement, increasing the cost of the relationship itself, the capital value of your business in any resale context is never going to be what you think it is. Aside from the legal/economic analysis of this dynamic, there is the fact that on a “visit” by your buyer to franchise HQ for a screening interview, any tough franchisor can poison any resale deal just by his conduct. Tough franchisors ask why they should approve a resale or buy you out if they can default you under the contract and just take your business back for next to nothing – at most the cost of a lawsuit or arbitration that they can afford and you can’t.

Franchisee leadership must know the realities and be able to teach the techniques for dealing with situations where the franchisees are probably wrong on the law, but can still change the game by adopting effectively militant relationship management techniques. Even the transfer scenario can be changed with the right tactics. But realities must be dealt with as realities, and franchisees have to be taught what the realities of each situation are.

Confronting tough guy franchisors in a business destroying mode can only be done through militant resistance.

Militant resistance requires that the franchisees recognize when they are dealing with an intractable franchisor in a business destroying mode.  Hiring leadership to reason with this franchisor is a waste of time and money. Frat boy office gentlemen are no match for a street smart tough guy franchisor. All he has to do is tell them in some polite and politically correct manner to go to hell, and the game is over. How go to hell is expressed includes delay, promises of consideration, propagandistic pretense to the adoption of fairer methods of dealing, and other nonsense responses that will never see the day when the talk is actually walked.

Franchisees have to find someone who can show them how to organize effectively militant resistance and who can protect the organizers from franchisor retaliation. One of the main barriers to effective franchisee group action is franchisor retaliation against franchisee leadership. Tough guy franchisors don’t have to destroy the ineffective leaders of nonsense franchisee groups. Why bother the impotent? But they will go after effective leadership, and that leadership has to be invulnerable.

Invulnerability is having the ability and the sheer guts to make himself the group leader so that the only place heat can be applied by the franchisor is on him. He must protect the identity of the group organizers who are franchisees. The ways tough guy franchisors try to find out who is behind the movement must be known, and methods to resist that must be mastered. Lessons must be taught about how to be militant by someone who is good at it, not by someone who may have read some books on it but never done it.

The franchisees must be provided with avenues of protected communication that are impenetrable by the franchisor. Leadership must know how to accomplish that. Password protected channels of communication are useless. Some Judas franchisee will give the franchisor his password or forward the communications to the franchisor in the hope of some inside favoritism. There are Judas franchisees in every franchisee group, and how to prevent them from imploding the group is another subject in which the leadership must be adept.

The franchisees must accept that there is no possibility of success without pervasive membership in the group and financial resources to support what is required. Protestations about not being able to afford what is called for need to be stymied. The cost of a pervasively supported franchisee organization is rarely more than the price of a pack of cigarettes a day. The cost of not joining is far more every year than the cost of joining. Franchisees who cannot recognize that will experience what franchisees who elect to go without effective leadership experience. You cannot do this on nickels and dimes.

Tough situations must be met with tough solutions. Tough solutions cost money, but not a prohibitive amount of money. Franchisees have to have sufficient intestinal fortitude to do what is called for, and they must be teachable. Freedom is not free.